SOUTH KOREA’S export growth came to a halt in June, as shipments of cars and consumer electronics fell sharply, casting a shadow over prospects for this year amid escalating trade tension between China and the United States.

Exports totaled US$51.2 billion, down 0.1 percent from a year earlier, falling back after a 13.2 percent jump in May, government data showed Sunday.

Imports were up 10.7 percent from a year ago, underperforming the survey’s forecast for an 11.4 percent increase.

The export sector’s sudden loss of growth may herald tougher times after a stellar performance over the past year, as Asia’s fourth-largest economy could become caught in the crossfire following the retaliatory imposition of tariffs by the United States and China, as well as the European Union.

“China-U.S. trade will be hit with a new set of tariffs starting July 6, and that’s clouding the outlook for South Korean exports in the second half,” said Lee Sang-jae, chief economist at Eugene Investment & Securities Co. in Seoul.

The weaker export performance was also partly down to a statistical base effect from particularly strong export growth in June 2017, when South Korea won major shipbuilding contracts, Lee said.

Of the nation’s 13 major export items, shipments of seven items including semiconductors, petrochemical products and computers gained, according to the nation’s trade ministry.

Car exports dragged the overall exports by declining 9.9 percent year on year, while exports of display panels and consumer electronics dropped 10.5 percent and 21.6 percent, respectively.

By destination, exports to China surged 29.8 percent, while shipments to the United States gained 7.6 percent year on year for the first 20 days of June. Shipments to ASEAN countries and the Middle East declined 1.3 percent and 10.4 percent, respectively.

Policymakers worry that South Korea’s exports to China, its biggest trading partner, could suffer from any decline in U.S.-China trade because a large chunk of South Korean exports to China are intermediate goods used in products assembled for sale elsewhere.

Commenting on outlook for China-bound exports, South Korea’s trade ministry said frictions between the United States and China “could put downward pressure” and squeeze South Korean shipments to China in the second half even as economic growth in the world’s second-biggest economy looks stable.

South Korea’s government is expecting annual economic growth of 3 percent this year, supported by the chip boom and an increase in fiscal spending.

(SD-Agencies)