A container ship leaving Pusan Newport Terminal in Busan, South Korea on July 1, 2021. REUTERS/Kim Hong-Ji/File photo
SEOUL – South Korea’s exports likely grew at the slowest pace in nearly two years in September, hurt by a weakening global economy led by China, a Reuters survey showed on Thursday.
The country’s outbound shipments were forecast to have grown 2.9 percent from the same month a year ago, according to the median forecast of 17 economists, slowing from a 6.6 percent gain in the previous month.
That would extend year-on-year gains in shipments to a 23rd consecutive month but mark the slowest pace in the streak, following three months of single-digit growth rates.
Shipment data out of Korea provides an early health check on global trade activity as manufacturers of chips to cars in Asia’s fourth-largest economy import massive amounts of raw materials and straddle a wide swathe of the world supply chain.
The slackening momentum for South Korea’s exports comes amid weakening global demand as many countries raise borrowing costs aggressively to fight a surge in inflation. China’s struggle to contain COVID-19 outbreaks have also hurt consumption.
During the first 20 days of this month, exports shrank 8.7 percent year-on-year, also affected by the calendar effect of fewer working days. Sales to China dropped 14 percent during the period, after three full months of declines.
“South Korea’s export momentum is likely to have weakened further in September, with shipments of electronics declining amid further signs that global consumer demand is softening,” said Lloyd Chan, senior economist at Oxford Economics.
“The outlook for South Korea’s goods exports will be challenging in the months ahead as global growth weakens.”
Imports were expected to outpace exports with growth of 16.4 percent, but it would also be slower than the 28.2 percent gain in the previous month and the weakest since February 2021.
Altogether, they would bring the trade balance to a deficit for a sixth consecutive month, but by a much narrower margin than a record monthly shortfall of $9.49 billion seen in August. In the survey, 10 economists provided a median deficit forecast of $3.45 billion.
Full monthly trade data is scheduled for release on the first day of October.
The poll also forecast the country’s annual inflation to remain flat at 5.7 percent in September, after softening in August for the first time in seven months. It hit a near 24-year high of 6.3 percent in July.
The survey of 11 economists, however, showed some division with five expecting the inflation rate to ease further, three picking no change at 5.7 percent, and the other three seeing a rebound.
On South Korea’s factory output, the economists expected production to have extended its downturn for a second month in August, falling 0.5 percent on a seasonally adjusted monthly basis, after a 1.3-percent decline in July.