Coronavirus latest: bad news from China’s factories drags Asia markets lower
S Korean export orders fall at fastest pace in 6 years on virus worries
Edward White reports from Seoul
South Korean export orders have fallen at their fastest pace in over six years as manufacturers cut production and closed factories in response to the coronavirus.
According to a Nikkei-Markit survey of South Korean manufacturers released on Monday new export sales last month declined at the sharpest rate since August 2013 on the back of falling demand as China saw sweeping industrial shutdowns in an urgent bid to stop the virus spreading.
“The South Korean manufacturing sector was hit by a dual-pronged negative shock to the demand- and supply-side of the economy in February amid the Covid-19 outbreak,” said Joe Hayes, an economist at IHS Markit.
“Output volumes fell sharply as production was suspended and, in some cases, factories were closed in response to the widespread disruption to China, South Korea’s most important trade partner,” he added.
The Nikkei-Markit manufacturing purchasing managers’ index fell to 48.87 last month from 49.8 last month, and remaining below the 50-point marker separating contraction from expansion.
In recent days a rising number of stoppages at South Korean factories has prompted international concern over potential collateral damage to not only Asia’s fourth-largest economy but the entire global technology supply chain.
Exports represent 45 per cent of South Korea’s GDP. In several key technologies, including the memory chips used in countless electronic devices, South Korean companies control more than half the global market.
South Korean health officials on Sunday reported 586 additional people are now battling the deadly virus, bringing the total to 3,736 — the largest outbreak of any country outside China. And the number of cases are expected to continue to rise after Seoul ramped up mass public testing in response to the virus. More than 60,000 people have tested negative for the virus while 32,000 new tests are under way.