South Korea Exports Post Slimmer Decline in Sign of Recovery
The let-up in exports slump adds to optimism that global commerce is turning a corner.
(Bloomberg) -- South Korea’s exports posted the smallest decline since April, offering evidence that the worst may be over for the Asian bellwether of global trade.
Exports in December fell 5.2% from a year earlier, data from customs office showed Wednesday. Economists surveyed by Bloomberg had expected a 8.6% fall. Imports decreased 0.7%.
The letup in exports slump adds to optimism that global commerce is turning a corner after the U.S. and China agreed to a truce in their trade war, which has hurt South Korea particularly hard by cutting demand for its semiconductors. The country’s export slide has put the economy on course for its slowest annual growth in 2019 since the global financial crisis.
Semiconductor sales, which account for the largest share of South Korean exports, declined 17.7% in December from a year earlier. Sales to China, South Korea’s biggest export destination rose 3.3%, first gain in 14 months.
Key Insights
- South Korea’s trade data, released earlier than most economies, serve as a barometer of global demand as the country is the world’s biggest source of memory chips which go into everything from computers to smartphones.
- Trade figures for the first 20 days of December had fallen 2% from a year earlier, with shipments to China rising for the first time since October 2018.
- “The rate of decline should ease now,” Stephen Lee, an economist at Meritz Securities, said before the release. “But global trade volumes aren’t recovering very quickly.”
- The Korea International Trade Association expects the decline in exports to be reversed during the first quarter of next year, citing a survey released on Dec. 26 that showed sentiments among exporters rising above the benchmark 100 for the first time since the last three months of 2018.
- The Bank of Korea has cut its interest rates twice in 2019 to support an economy hit by trade tensions.The BOK expects South Korea’s semiconductor exports to enter a “recovery phase” in mid-2020.
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- Trade surplus for December was $2.0 billion
- Exports to the U.S. fell 0.4%, to Japan down 5.6%
- Semiconductor export volume rises 35.9%
- 2019 exports drop 10.3%
- Expects exports to rise 3% in 2020
--With assistance from Daedo Kim and Shinhye Kang.
To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net
To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jiyeun Lee, Peter Pae
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