0840 GMT January 18, 2020
Exports dropped 14.3 percent from a year earlier in November for a sixth straight double-digit decline, data from the trade ministry showed Sunday. Economists surveyed by Bloomberg had expected a 9.7 percent fall. Preliminary figures had also offered hope of some respite in the export slide. Imports decreased 13 percent.
The government was more upbeat on the outlook for next year, saying shipments hit bottom in October and will rebound from the first quarter of 2020.
“South Korea is not the only casualty of the US-China trade dispute, a slowdown in the global economy and no-deal Brexit,” the ministry said, noting that most of the world’s 10 biggest exporting countries had seen shipments decline as of September. “We’re particularly harder hit because of heavy reliance on China by region and semiconductor by sector.”
Bank of Korea Governor Lee Ju-yeol also insisted two days ago that the economy was passing through its most painful moment and talked of a gradual recovery next year.
Still, the latest data suggests policy makers and economists need to remain on guard for a possible continuation of the global slowdown.
The export numbers add to signs that the Asian country is on course for its weakest economic growth in a decade.
The BOK slashed its growth projections for this year and next by 0.2 percentage points to two percent and 2.3 percent, respectively. That would be the slowest pace since 2009 when the country suffered in the aftermath of the global financial crisis.
Other key indicators like industrial output and consumer prices also point to tepid demand, but the government has few policy options left to support the economy.
Expansionary fiscal and monetary policies are pushing household debt to all-time highs as people borrow more to invest in the domestic property market in search of higher yields. That in turn is jeopardizing President Moon Jae-in’s pledge to provide affordable homes.
Chips are down
South Korea’s trade figures have gained particularly close attention in recent months as analysts try to gauge whether the worst of a tech sector slump is over and how quickly it might recover.
Korean companies such as Samsung Electronics Co. are among the world’s biggest suppliers of semiconductors, smart-phones and other tech-related items. The November data showed that chip exports, the largest category in Korea’s overseas shipments, dropped 30.8 percent, compared with falls of more than 30 percent in recent months.
South Korea’s export-dependent economy has been one of the hardest-hit by the US-China trade war and the disruptions it has caused in the global supply chain, with almost 40 percent of the nation’s shipments headed to the two countries.
The government is pinning its hopes on an export recovery next year as the US and China move towards a preliminary trade deal.
Shipments to China dropped 12.2 percent in November from a year earlier, reflecting slowing growth in the world’s second largest economy and South Korea’s biggest export destination. The decline was 16.9 percent in October.
Exports to Japan fell 10.9 percent, while imports declined by 18.5 percent, as the two neighboring countries go through their own trade dispute. Japan said in summer that it would impose tighter checks on its exports of gas and two other materials used in the tech industry, citing national security concerns.
The ministry said the materials make up only 1.4 percent of Korea’s total imports from Japan and haven’t yet caused any disruption to production.
The nation’s trade surplus for November was $3.4 billion, narrowing from $5.3 billion in October.