SEOUL- South Korea’s exports likely fell in February for a fifth straight month, dragged down by weak China-bound shipments, a Reuters survey showed on Monday, although the pace of the decline would ease thanks to favorable calendar effects.
Outbound shipments were expected to have fallen 8.7 percent in February from a year earlier, according to the median estimate of 19 economists in the survey, compared with a 16.6 percent drop in January, which was their worst decline since May 2020.
It would extend their run of year-on-year losses to a fifth straight month, but would mark the second-slowest pace of decline in the streak after 5.8 percent in October.
“Semiconductor exports are likely to continue their declining trend amid falling prices and sluggish demand, while exports to China fall by a double-digit percentage despite hopes for an increase in demand with its reopening,” said Chun Kyu-yeon, an economist at Hana Securities.
“In line with the slowdown in the global manufacturing cycle, South Korea’s exports are expected to log negative growth rates through the first half of this year.”
There were 22 working days in February, two days more than a year before as the Lunar New Year holiday landed in February last year. This year it was in January.
In the first 20 days of this month, South Korea exported goods worth 2.3 percent less than a year earlier. Exports to China, South Korea’s biggest trading partner, dropped 22.7 percent, outweighing gains in US and EU-bound shipments.
Also distorted by the shift in the Lunar New Year holiday, the country’s imports likely grew 4.0 percent in February from a year earlier, according to the survey, after falling for two straight months in January and December, by 2.8 percent and 2.5 percent, respectively.
All together, South Korea is expected to post a 12th consecutive monthly trade deficit. The median expectation of economists in the survey was a deficit of $6.06 billion, much smaller than the previous month’s record high $12.65 billion.
On factory output, economists estimated seasonally adjusted production to be flat in January from December, when it was 2.9 percent lower than in the previous month. The data will be reported on March 2.
The survey also found a median expectation that the consumer price index for February would be reported on March 6 as 5.1 percent higher than a year earlier, slightly down from 5.2 percent in January.
Meanwhile, South Korea’s foreign exchange authorities met with domestic exporting companies yesterday to discuss supply and demand conditions in the local currency market.
“We will review exporters’ dollar supply and demand and check whether there is any difficulty (they are facing),” a foreign exchange authority told Reuters, adding there was increased volatility in the market in recent days.
Earlier in the session, the South Korean won weakened as much as 1.20 percent against the dollar, hitting its lowest level since early December last year.
South Korea’s economy inched toward its first recession in three years as data last month showed its January trade deficit soared to a record thanks to a plunge in exports caused by a combination of long holidays and cooling global demand.
Asia’s fourth-largest economy, which relies heavily on trade for growth, shrank by 0.4 percent in the October-December quarter and is now on the brink of falling into what would be its first recession since the middle of 2020 during the height of the COVID-19 pandemic. – Reuters
