Exports Nosedive Amidst Weakened Demand

Credit: John Simmons/ unsplash
  • South Korea’s exports likely extended their falling streak to a third straight month in December.
  • The country’s outbound shipments were projected to have fallen 10.1%.
  • Trade balance to remain in deficit for ninth month.

“South Korea’s exports are under pressure from declining exports to China, where the economy still remains sluggish even after easing of its COVID-19 restrictions, and weak sales of IT products, mainly semiconductors,” said Park Sang-hyun, chief economist at HI Investment and Security.

Easing Restrictions

China has eased some of its most stringent restrictions to fight COVID-19 since last month. During the first 20 days of December, South Korea’s exports shrank 8.8% from the same period a year ago. Those to China dropped 25.5%, outweighing gains in U.S. and EU-bound shipments, in likely the seventh consecutive falling month. Meanwhile, imports were expected to have fallen at a much milder pace of 0.6% in December, after a 24-month gaining streak through November.

Trade Balance In Deficit

Altogether, the trade balance is set to remain in deficit for a ninth consecutive month. It is also on track for the first annual shortfall in 14 years and the largest-ever. On factory output, economists expected production to have fallen 0.8% on a seasonally adjusted monthly basis, which would be slower than 3.5% in October and the slowest in its five-month falling streak. The country’s consumer price index for December was 5.0% higher than a year ago, the same as in November, when the annual inflation rate hit a seven-month low.

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Source: Reuters