Korea’s exports dropped 4.2 percent from a year earlier in March, following the 0.7 percent and 3.4 percent losses in January and February, respectively, according to data released by the central bank last week.

Experts attributed the fall in exports in the first quarter to a combination of a weak Japanese yen, a slower-than-expected global economic recovery and sliding international crude prices that are reducing profits of the country’s petrochemical products exporters.

Unfavorable commerce conditions abroad are expected to continue to drag down Korea’s exports in the second quarter. Its leading export index for the April-June period came to 48.5 points, down 3.5 points from the previous quarter, according to a survey by the Korea Trade-Investment Promotion Agency on 2,229 trading company officials and foreign buyers last month.

A reading over 50 signals exports will fare better than the previous quarter, while lower figures indicate overseas shipments will decrease. The latest quarterly figure marked the first time the index fell below the benchmark since the October-December period of 2009, when KOTRA began to compile it.

Over the past years, exports have made shrinking contributions to Korea’s economic growth. The contribution rate, which surged to 202.7 percent in 2011, slid to 121.7 percent in 2012, 82.7 percent in 2013 and 45.5 percent last year, the lowest in five years, figures from the Bank of Korea showed.

BOK analysts said the drop in exports’ contribution to growth was attributed not only to the sluggish pace of increase in overseas shipments but to expanding portions of consumption and investment. Consumer spending and corporate investment contributed 1.3 percentage points and 1.5 percentage points each to Korea’s economic growth last year.

What is worrisome, however, is domestic spending also remains weak and shows no signs of picking up anytime soon. Sluggish domestic consumption resulted in imports shrinking at a faster pace than exports in recent years, with the country recording the largest monthly trade surplus of $8.39 billion in March.

Concerns are rising that Asia’s fourth-largest economy may be dragged into deflation. Korea’s consumer price hike rate remained far below 1 percent for the fourth consecutive month in March.

In contrast to sluggish consumer spending and corporate investment, real estate and stock markets are being boosted by a rising inflow of floating capital. The number of apartments that changed hands last month recorded a six-year high and the Korea Composite Stock Price Index last week soared to its highest level in a year.

This unbalancing phenomenon suggests a string of stimulus measures taken by the government, coupled with the central bank’s decision last month to cut its key rate to a record low of 1.75 percent, have resulted in channeling increased money supply into assets markets, rather than into expanding production and spending.

Active property transactions are accompanied by a sharp rise in household debt, which is holding down consumer spending. The discrepancy between companies’ deteriorating profits and their rising stock prices could not be deemed to last long and might have a severe adverse impact on the economy.

A fundamental, long-term economic recovery can be ensured only when floating capital flows into boosting consumer expenditure and corporate investment. The government should be more drastic and creative in working out and implementing stimulus policies. It is also important to complete key reform tasks in the labor, finance, education and public sectors, as envisioned, in order to help boost national competitiveness and growth potential.