South Korea’s July Exports Plunge 14.5% on Weak Chinese Demand
South Korea’s export decline is expected to worsen in July due to persistently weak demand from China, according to a survey conducted by Reuters. Outbound shipments are projected to fall by 14.5% year-on-year, marking the 10th consecutive month of decline. This figure is more than double the 6.0% loss seen in June, which had raised hopes for a possible turnaround.
Most economists attribute the decline in exports to a weak Chinese economy, as well as a slowdown in other major economies. Some also point to a high base effect from the previous year. Oh Chang-sob, an economist at Hyundai Motor Securities, commented that exports are still remaining sluggish due to a weaker recovery in the Chinese economy. Park Sang-hyun, an economist at HI Investment Securities, added that not only exports to China, but shipments bound for the United States are also expected to decrease this month.
Preliminary data from South Korea’s customs agency reveals that in the first 20 days of July, the country exported goods worth 15.2% less than the same period last year. Shipments to China and the United States experienced respective drops of 21.2% and 7.3%.
As a bellwether for global trade, South Korea’s monthly trade figures provide insights into the health of world demand. The survey also indicates that imports in July are expected to decline by 24.6% compared to the previous year, marking the sharpest contraction since September 2009.
Despite the decline in exports and imports, South Korea is poised to post a second straight monthly trade surplus. Economists forecast a surplus of $3.11 billion, wider than the $1.13 billion recorded in the previous month, which marked the end of a 15-month streak of deficits.
On Tuesday, August 1, at 9 a.m. (0000 GMT), South Korea will release its full monthly trade figures for July. These figures will shed further light on the country’s trade situation and its impact on the global economy.
In conclusion, South Korea’s July exports are expected to experience a significant decline, largely due to weak demand from China. Imports are also anticipated to drop sharply. The prolonged slump in exports and imports is raising concerns about the strength of the global economy, as South Korea serves as an important barometer of international trade. The upcoming release of the country’s full monthly trade figures will provide a more comprehensive picture of the current trade situation and its potential implications.
