Economists say S. Korea exports set to expand

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SEOUL- South Korea’s exports likely snapped a year-long downturn and swung to growth in October on solid demand in the United States and rising shipments of chips though soft shipments to China dragged, a Reuters survey showed on Monday.

South Korea – a bellwether for global trade – is the first major exporting economy to report monthly trade figures, providing clues on the health of worldwide demand.

Outbound shipments from Asia’s fourth-biggest economy are expected in October to have risen 5.5 percent  from the same month the year before, swinging from September’s 4.4 percent  loss, the median estimate of 12 economists showed.

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That would end a 12-month run of declines in exports through to September.

The growth in October was likely led by robust shipments to the United States and fueled by a recovery in semiconductor exports, while base effects also provided support after a year-long downturn, economists said.

Weak demand in China, however, was still a headwind, they said.

“South Korea’s exports recovery will likely continue into next year,” said Chun Kyu-yeon, an economist at Hana Securities. “Robust trends are continuing in US  and EU-bound shipments, although China-bound exports still remain sluggish.”

In the first 20 days this month, South Korea exported goods worth 4.6 percent  more than the year before. US -bound exports jumped 12.7 percent , while those to China were down 6.1 percent.

“The trend of exports growth may continue on base effects, but the degree of recovery is expected to be weak,” said Park Sang-hyun, an economist at HI Investment Securities.

Meanwhile, amid higher oil prices, imports likely dropped 4.3 percent  in October from a year earlier versus a slump of 16.5 percent  in September, marking the mildest decline in eight months, the survey also showed.

That would bring the trade balance to a deficit in October, after four consecutive months in surplus. The median forecast in the survey tipped a deficit of $2 billion, a sharp turnaround from a surplus of $3.7 billion in September.

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