South Korea’s export decline is deepening, indicating a prolonged period of weakness for the country’s economy. According to a survey conducted by Reuters, the decline in outbound shipments is expected to accelerate in July, primarily due to weak demand from China. Economists predict a 14.5% fall in exports compared to the previous year, marking a 10th consecutive month of year-on-year losses. This decline is more than double the 6.0% loss recorded in June, dashing hopes for a swift recovery.
The Chinese economy is identified as the major factor weighing on South Korea’s exports, along with a slowdown in other major economies. Some economists also attribute the sharper decline to a high base from the previous year. Oh Chang-sob, an economist at Hyundai Motor Securities, stated that exports remain sluggish due to the slower recovery in the Chinese economy. Similarly, economist Park Sang-hyun at HI Investment Securities warned of declining shipments to the United States as well.
Data from the South Korean customs agency reveals that in the first 20 days of July, the country’s exports declined by 15.2% compared to the same period last year. Shipments to China and the United States witnessed drops of 21.2% and 7.3%, respectively. As a significant player in global trade, South Korea’s monthly trade figures serve as an important indicator of worldwide demand.
The survey also showed a concerning trend in imports, with a projected 24.6% decline in July compared to the previous year. This figure surpasses the 11.7% drop recorded in June and represents the worst performance since September 2009. Despite these challenges, South Korea is expected to achieve a second consecutive monthly trade surplus. Economists forecast a surplus of $3.11 billion, wider than the $1.13 billion surplus reported in the previous month, which broke a streak of 15 consecutive months of deficits.
The full trade figures for July will be released by South Korea on Tuesday, August 1 at 9 a.m. (0000 GMT). These figures will provide further insight into the state of the country’s economy and its outlook for the future.
