By Cynthia Kim
SEOUL (Reuters) - South Korea's exports contracted less in April than in the previous month, but the fifth straight of month of shrinkage, with memory chip shipments down 13.5 percent, could hurt chances of the trade-reliant economy returning to growth this quarter.
April exports fell 2.0 percent from a year earlier, government data showed on Wednesday. That was less than the 5 percent decline forecast in a Reuters poll and March's 8.2 percent drop.
Policymakers worry that the trade dispute between Washington and Beijing could cause collateral damage for South Korea, especially as Asia's fourth largest economy suffered an unexpected contraction in the first quarter on slumping exports and investment.
Gross domestic product (GDP) in the first quarter declined a seasonally adjusted 0.3 percent from October-December, the worst contraction since a 3.3 percent drop in late 2008.
The trade ministry said slowing Chinese growth and weaker global demand for Korea's memory chips resulted in further declines in exports in April.
It also said April exports would have expanded 0.8 percent from a year earlier if not for the 13.5 percent drop in memory chips.
"The huge price drop in memory chips, adjustment of inventories at global IT companies, as well as stalled consumer demand for new smartphones in China" have slowed semiconductor exports in April, the ministry said.
Shipments to China, South Korea's biggest trading partner, fell 4.5 percent, making a sixth consecutive monthly fall.
However, U.S.-bound exports rose for a seventh consecutive month, helped by a boost in demand for Korean cars and mobile phones.
"Exports are likely to recover in the coming months as demand from China recovers. The chip sector will also likely see a rebound in demand," said Chun Kyu-yeon, an economist at Hana Financial Investment.
Imports increased 2.4 percent from a year earlier, compared with the poll prediction of 0.3 percent. This led to a preliminary trade surplus of $4.12 billion, down from $5.2 billion in March.
South Korean markets are closed on Wednesday for a holiday.