South Korea’s early trade data shows export slump persisting in February

South Korea's headline exports fell 2.3 per cent in the period from Feb 1 to 20, with chip sales plunging 43.9 per cent. PHOTO: REUTERS

SEOUL – South Korea’s early trade data showed a decline in exports persisting this month, fuelling concerns about the economic outlook ahead of this week’s central bank decision.

Average daily shipments dropped 14.9 per cent in the first 20 days of February compared with a year earlier, the Customs office said on Tuesday. This follows an 8.8 per cent decline in the same period of January and points to further weakness in global demand.

Headline exports fell 2.3 per cent in the period from Feb 1 to 20, with chip sales plunging 43.9 per cent. Shipments to China dropped 22.7 per cent, barely improved from January despite a favourable seasonal holiday factor. The headline figure does not account for differences in working days.

Exports began to fall late last year as the world economy deteriorated, making global trade one of the biggest risks for South Korea’s outlook. On top of Russia’s war in Ukraine and central bank tightening, sliding semiconductor demand is adding to trouble for South Korean manufacturers, many of them important players in supply chains worldwide.

The data comes shortly before the Bank of Korea (BOK) releases its formal assessment of the economy and the growth outlook later this week. Economists expect the central bank to hold its key rate at 3.5 per cent on Thursday as it aims to avoid further weighing on economic momentum.

South Korea posted its first economic contraction in more than two years in the last quarter as trade deteriorated. BOK governor Rhee Chang-yong sees declining exports as a key concern, along with energy prices and a property slump.

The trade deficit in the first days of February reached US$6 billion (S$8 billion), compared with US$10 billion in the same period last month. South Korea posted its worst full-month trade shortfall on record in January.

Policymakers expect only overseas shipments to rebound in the second half of this year. BLOOMBERG

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