South Korea exports to extend downturn amid worsening China outlook: Reuters poll

By Jihoon Lee

SEOUL (Reuters) – South Korea’s exports likely fell in August for an 11th consecutive month, a Reuters survey showed on Wednesday, as economic recovery in top export market China continues to stutter.

Outbound shipments are expected to have fallen 11.6% in August from the same month the year before, showed the median estimate of 22 economists in the survey conducted Aug. 21-29.

That would come after a drop of 16.4% in July, the worst in six months. Exports have been logging year-on-year losses since October.

Pessimism is growing around China’s economy, beset with real estate troubles, while demand is also weakening in other regions.

“The recovery in China-bound exports is being delayed due to slower normalisation of its economy” after the COVID-19 pandemic, said economist Park Sang-hyun at HI Investment Securities.

“Momentum is also seen weakening in shipments to the European Union and the United States, which have been providing at least some support to South Korean exports.”

In the first 20 days this month, South Korea exported goods worth 16.5% less than the year before. Shipments to China dropped 27.5%, while those to the U.S. and EU fell 7.2% and 7.1% respectively.

“We don’t expect there to be a clear sign of a recovery in exports yet in the August trade data,” wrote economist Oh Suk-tae at Societe Generale (OTC:).

“We will continue to wait for firm signs of a semiconductor recovery, though rising concerns about the slowdown of the Chinese economy are likely to worsen South Korea’s near-term export outlook.”

South Korea – a bellwether for global trade – is the first major exporting economy to report monthly trade figures, providing clues on the health of worldwide demand.

Exports are likely to swing to growth from October on more favourable comparison bases and despite bigger risk regarding China’s economy, South Korean authorities have said.

The Reuters survey also showed imports in August likely fell 23.2% from a year earlier, after a 25.4% drop in July, turning the trade balance negative by a small margin.

The median forecast in the survey pointed to a deficit of $0.40 billion, while four of 15 economists expected a third monthly surplus.

South Korea is scheduled to report monthly trade figures for August on Sept. 1, at 9 a.m. (0000 GMT).

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