There are signs of life emerging from the world’s economic ‘canary in the coal mine’

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The world’s economic “canary in the coal mine” is still weak, but it seems to be showing signs of improvement.

South Korean exports, nicknamed “the world’s economic canary in the coal mine,” fell 8.2% in March from a year earlier, according to Korea’s latest export data.

This is the 15th consecutive month that exports have dropped.

However, it’s worth nothing that this drop better than economists’ expectations of 10.4%, and it narrowed from January-February – meaning that one could read this as a positive sign, too.

Korean exports are often referred to as the “world’s economic canary in the coal mine” by economists because of their heavy exposure to the US, China, and Japan — some of the world’s biggest economies.

One could argue that they generally reveal more about the country’s trading partners than about what’s happening at home.

“Korea’s March export numbers remain weak but saw a second-order derivative improvement on a %YoY and a sequential basis,” noted a Morgan Stanley team led by Deyi Tan.

“Given the high correlation between Korea and global trade, a similar trend is likely for the latter.”

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On a geographic basis, exports to China fell 12.2%, which was narrower than the contraction seen during the previous two months. Additionally, exports to the US fell 3.8%.

Notably, there was one interesting thing “under the hood” of Korea’s march trade data, as Bloomberg’s Jiyeun Lee pointed out earlier on Friday: Vietnam is becoming a more important export market for Korea.

According to Lee, shipments to Vietnam rose 13.5%, the biggest gain among countries, and it even beat out Hong Kong to become Korea’s third-biggest export market so far this year — following China and the US.

Moreover, exports to the EU reversed course and rose 12.7% in March, following a 2.8% contraction in February, according to data cited by Credit Suisse’s Christiaan Tuntono.

So maybe things aren’t so bad for the global economy. Morgan Stanley