SEOUL – South Korea’s early trade data shows an export slump persisting in December, amid stiffening global economic headwinds.

Shipments decreased 8.8 per cent in the first 20 days of the month compared with a year earlier, the Customs office said on Wednesday. This compares with a 14 per cent drop for the full month of November. The country posted a US$6.43 billion (S$8.7 billion) trade deficit in the period.

Average shipments that exclude working-day differences also fell 8.8 per cent. Chip sales sank 24.3 per cent and exports to China tumbled 26.6 per cent.

South Korean exports have begun to drop in recent months as the world economy enters a slowdown due to Russia’s continuing war in Ukraine, fallout from China’s lockdowns and global monetary policy tightening.

A downturn in memory chip demand is exacerbating trade weakness, prompting chipmakers and other industrial giants to recalibrate manufacturing plans.

Weakening exports, rising commodity prices and sliding investor sentiment are among the headwinds facing South Korea next year. Industrial production has already weakened for four months in a row in the latest sign of a cooling economy.

In November, the Bank of Korea downgraded its forecast for 2023 economic growth to 1.7 per cent from 2.6 per cent previously, pointing to weakening exports. Memory chips that account for the largest share of South Korean products sold abroad are likely to regain momentum from the second half of 2023, it said.

South Korea’s exports will probably be 4 per cent lower in 2023 compared with 2022, for a total of US$662 billion, while imports will fall 8 per cent, according to a Korea International Trade Association forecast.

Separately, the nation will likely see a trade deficit of US$13.8 billion in 2023, the trade association said. For 2022, South Korea is on track to post its first annual trade shortfall since the global financial crisis. BLOOMBERG