Economic Indicators

S. Korea July exports fall the most in over 3 years as China sputters

2023.08.01 01:15


© Reuters. FILE PHOTO: A truck drives between shipping containers at a container terminal at Incheon port in Incheon, South Korea, May 26, 2016. REUTERS/Kim Hong-Ji/File Photo

By Jihoon Lee

SEOUL (Reuters) -South Korea’s exports fell more than expected in July and at the steepest pace in more than three years, trade data showed on Tuesday, raising concerns that the downturn may drag on longer than expected amid persistently weak demand from China.

Overseas sales by Asia’s fourth-largest economy fell 16.5% year-on-year to $50.33 billion in July, compared with a 6.0% decline in June and a 14.5% drop tipped in a Reuters survey of economists.

It was the biggest percentage fall since May 2020 and the 10th consecutive month exports fell in annual terms, the longest period since January 2020.

“Chances are there still will be a recovery in the second half of the year, but it may be weaker than how it is projected now,” said Park Sang-hyun, chief economist at HI Investment Securities.

“Declines in the third quarter will likely be narrower than the second quarter, but it is difficult to say whether there will be a swing to growth,” Park added.

The steeper fall in July was due to a sluggish semiconductor industry, weaker oil prices and a high base, the trade ministry said, adding the government would make utmost efforts for an early turnaround in exports to growth.

The data showed exports of semiconductors dropped 33.6%, worsening from a 28.0% loss the previous month and marking the 12th straight month of decline for the sector. Petroleum product exports slumped 42.3%, while automobiles gained 15.0%.

By destination, shipments to China dropped 25.1%, the sharpest in three months, while those to the United States and the European Union also fell 8.1% and 8.4%, respectively.

Imports fell 25.4% to $48.71 billion, also steeper than the previous month’s 11.7% fall. Economists had expected a 24.6% decline.

That left South Korea’s trade surplus at $1.63 billion for July, wider than $1.13 billion in June.

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