SEOUL- South Korea’s central bank expects exports to weaken at a faster pace going forward and the current account to remain highly volatile for some time, it said in a report published on Wednesday.
“Exports are expected to weaken at a fast pace going forward, as major economies’ growth shrinks altogether for the first time since the global financial crisis, excluding the pandemic, and as the global IT cycle slows more steeply than expected with fading pandemic effects,” the Bank of Korea (BOK) said.
The slowdown will be led by IT products, especially those to China, which account for nearly 40 percent of total IT exports, the BOK added.
The BOK expected the current account to remain highly volatile for some time, amid high global uncertainty, with a shift in consumer spending from goods to services adding pressure.
South Korea’s exports grew at the slowest pace in nearly two years in September as softening global demand piles pressure on the trade-dependent economy.
Overseas shipment grew 2.8 percent in September, missing the 2.9 percent tipped in a Reuters poll of analysts and the slowest expansion since October 2020.
Asia’s fourth-largest economy has seen export growth decline to the single digits since June as slowdowns in the United States, Europe and China put the brakes on demand for Korean goods.
Shipment data out of Korea provides an early health check on global trade as its manufacturers of chips to cars import massive amounts of raw materials and components and straddle a wide swathe of the world supply chain.
With growing fears of a global recession, Asia’s exports are expected to weaken further in coming months.
Imports jumped 18.6 percent, faring better than 16.4 percent expansion expected in the survey but slowing from a 28.2 percent gain in August.
That brought the trade balance to a $3.77 billion deficit, marking a sixth consecutive month in red.
Exports of semiconductors declined 5.7 percent in September from a year earlier, while steel exports dropped 21.1 percent. Auto exports, however, were up 34.7 percent.
By destination, shipments to the United States gained 16.0 percent, but those to China and the European Union were down 6.5 percent, and 0.7 percent, respectively.
