Morgan Stanley analytics forecast the economy will return to pre-crisis levels by the fourth quarter. Here’s why.
South Korean exports head south for the fifth month
In April, South Korea's exports shrank less than in March, although demonstrating the fifth consecutive diving month, with memory chip shipments decreasing by 13.5%. It could reduce the probability of the trade-reliant South Korean economy to get back to surge this quarter.
From 2018, April exports inched down by 2%. It turned out to be less than the 5% tumble estimate in a Reuters survey as well as March's 8.2% decrease.
Policymakers fear that the trade clash between China and America could harm the South Korean economy. Moreover, Asia’s number four economy faced a sudden contraction in the first quarter on diving exports and investment.
GDP in the first quarter headed south a seasonally updated 0.3% from October-December that appears to be the worst slump since a 3.3% decrease in late 2008.
The trade ministry told that decelerating Chinese surge as well as weaker global demand for South Korea's memory chips resulted in further dives in exports in April.
Shipments to China, which appears to be South Korea's number one trading partner, inched down by 4.5%, thus making a sixth monthly dive in a row.
By the way, US-bound exports managed to rally for the seventh month in a row, underpinned by a boost in demand for Korean vehicles as well as handsets.
Exports will most probably recover in the nearer future because demand from China revives. Additionally, the chip sector will also face a rebound in demand.
Besides this, imports went up by 2.4% from 2018, in contrast with the survey forecast of 0.3%. It provoked a preliminary trade surplus of about $4.12 billion, down from March’ outcome of $5.2 billion.
USD’s rally takes a pause, while riskier assets are modestly rising.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.