SEOUL Reuters - South Korea's exports likely grew at the slowest pace in nearly two years in September, hurt by a weakening global economy led by China, a Reuters survey showed on Thursday.
The country's outbound shipments were projected to have increased 2.9% from the same month a year ago, according to the median forecast of 17 economists, which has decreased from a 6.6% gain in the previous month.
That would extend year-on-year gains in shipments to a 23 rd consecutive month, but mark the slowest pace in the streak after three months of single-digit growth rates.
Shipment data out of Korea provides an early health check on global trade activity, as manufacturers of chips to cars in Asia's fourth largest economy import huge amounts of raw materials and straddle a wide swathe of the world supply chain.
South Korea exports are experiencing a slackening momentum due to weak global demand, as many countries raise borrowing costs aggressively to fight a surge in inflation. Consumption is hurt by China's struggle to contain COVID 19 outbreaks.
Exports fell by 8.7% year-on-year during the first 20 days of the month, which was also affected by the calendar effect of fewer working days. After three full months of declines, sales to China decreased 14.0% during the period.
According to Lloyd Chan, senior economist at Oxford Economics, South Korea's export momentum will likely have weakened further in September, with shipments of electronics declining amid further signs that global consumer demand is softening.
The outlook for South Korea's goods exports will be challenging in the months ahead as global growth weakens. Imports were expected to surpass exports with growth of 16.4%, but it would be slower than the 28.2% gain in the previous month and the weakest since February 2021, as it would be the lowest since February 2021.
They would bring the trade balance to a deficit for a sixth consecutive month, but by a much narrower margin than the record monthly shortfall of $9.49 billion seen in August. The median deficit forecast was $3.45 billion, according to 10 economists.
The full month's trade data is scheduled to be released on the first day of October.
The country's inflation is expected to remain flat at 5.7% in September, after softening for the first time in seven months in August. It hit a 24 year high of 6.3% in July.
The survey of 11 economists showed some disagreement with five expecting the inflation rate to ease further, three picking not change at 5.7%, and the other three expecting a rebound.
After a 1.3% decline in July, the economists expected production to have extended its downturn for a second month in August, falling 0.5% on a seasonally adjusted monthly basis.