(MENAFN – Gulf Times) Early trade data from South Korea suggests that the coronavirus epidemic has begun to disrupt supply chains in the region, as many Chinese factories remain closed, complicating deliveries of essential parts and components to the world industrial.
Average daily shipments from South Korea fell 9.3% during the first twenty days of February compared to a year earlier, the customs office said on Friday.
Total shipments to China, South Korea’s main trading partner, fell by 3.7% despite the fact that the period had more business days than last year.
Imports from China plummeted 19%.
“Coronavirus appears to have affected trade a little, said Lee Hong-bae, professor of international trade at South Korea’s Dong-Eui University.” The fall in exports and imports with China shows that the chain supply is jumping, and probably will not be until the second half of the year, when we will see it back on track.
Overall South Korea’s exports rose 12% between February 1 and 20, supported by calendar distortions.
The Lunar New Year holiday calendar added three working days per month this year in many Asian economies, about a 25% increase in working hours compared to 2019 in basic terms.
Before the epidemic spread into and beyond China, global trade was expected to resume in early 2020.
Now that picture is reversing, with policy makers rushing to assess the enormity of the fallout and the necessary measures.
Central banks in Asia have stepped up action, with Indonesia, the Philippines and Thailand having recently cut rates, and others such as Singapore have planned major fiscal stimulus.
Assumptions are growing that the Bank of Korea may offer a cut next week. “The data are likely to underestimate the extent of the drop in Chinese demand,” said Rory Green, an economist at TS Lombard before the customs report. “A prolonged closure will therefore clearly weigh on Korea’s exports.
South Korean President Moon Jae-in has warned that the impact of the new virus could be bigger and more lasting than a 2015 epidemic that killed 38 people in South Korea and hit growth.
Back then, the central bank responded with a rate cut and the government issued an extra budget of 11.6 tons ($ 9.8 billion).