(Bloomberg) -- South Korea’s export slump extended through March, highlighting tepid demand in a global economy battered by banking-sector turmoil.

Shipments adjusted for working-day differences decreased 17.2% from a year earlier, according to data released Saturday by the trade ministry. Headline exports dropped 13.6%, compared with economists’ forecasts for a 16% decline. Overall imports fell 6.4%, resulting in a trade deficit of $4.62 billion, the smallest in six months.

Korean exports serve as a barometer of international trade as the nation sells items such as chips, displays and refined oil, which straddle supply lines. The country is home to some of the world’s biggest semiconductor and smartphone makers.

Exports of chips slumped 34.5% in March, contributing to the monthly decline. Overseas shipments of displays plunged 41.6% while automobiles jumped 64.2%.  

Worldwide demand is likely to remain weak as central banks persist with interest-rate increases to combat inflation and Russia’s war on Ukraine continues. Financial-sector turmoil following the collapse of Silicon Valley Bank and trouble at Credit Suisse Group AG has also damped confidence and increased volatility.

Trade is a key component of Korea’s economy because the country relies heavily on global commerce to generate growth. The economy contracted in the final three months of 2022 from the previous quarter and may struggle to eke out growth in the first period of this year.

Policymakers are looking to a potential rebound in semiconductor prices for improvement in exports in the latter half of the year. China’s recovery after its reopening from Covid restrictions may deliver another boost to Korean exports.

Asia’s overseas shipments have likely troughed even though a recovery is set to be gradual compared with previous upturns, according to Morgan Stanley.

--With assistance from Tomoko Sato and Youkyung Lee.

(Updates with details of chip, auto exports in fourth paragraph)

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