South Korea’s exports unexpectedly fell for the first time in three months, suggesting that tepid global demand and gains in the won are sapping economic momentum as a new president prepares to take office.
Overseas shipments dropped 5.5 percent last month from a year earlier, after a revised 3.8 percent increase in November, the Gwacheon-based Ministry of Knowledge Economy said in a statement yesterday. The median estimate in a Bloomberg News survey of 12 economists was for a 0.8 percent advance.
Yesterday’s report on sales that make up about half the nation’s economy is the first since Park Geun-hye won the Dec. 19 presidential election. GDP may expand as much as 3.8 percent this year as overseas demand improves and Park boosts spending on welfare, according to HSBC Holdings, a rate that compares with the 2.1 percent for last year estimated by South Korea’s Ministry of Finance.
The ministry said in a statement that exports declined as last month had three fewer working days than December 2011. Average exports on working days rose 7.6 percent to US$2.1 billion last month from a year ago, the ministry said.
Imports fell 5.3 percent last month from a year earlier, the ministry said. The trade surplus was US$2 billion after a US$4.4 billion excess in November.
Shipments abroad face the headwind of a strengthening won, which advanced 7.7 percent last year, top among Asia’s 11 most-traded currencies. The won gained 0.2 percent against the US dollar to 1,070.53 at the close on Friday in Seoul, and the KOSPI index of stocks advanced 0.5 percent. Local financial markets were closed on Monday.
“A gradual global economic recovery will boost overseas shipments of most products, including machinery and information and technology goods,” the ministry said in the statement.
Headwinds include a “continued global fiscal crisis, spreading trade protectionism and the won’s appreciation due to quantitative easing steps in advanced countries,” it said.
Exports will rebound 4.1 percent this year while imports may increase 5 percent, resulting in a trade surplus of US$25 billion, the ministry predicted. Last year, exports fell 1.3 percent and imports dropped 0.9 percent, leaving a trade surplus of US$28.6 billion, according to the ministry’s report.
Emerging-market countries, including China, will continue to provide a boost to South Korean exporters, while demand in the US and EU is unlikely to pick up sharply soon, the ministry said.
A better global outlook is boosting prospects for companies such as Samsung Electronics Co, the world’s biggest maker of smartphones and televisions. Fourth-quarter operating profit for Samsung may reach 9.05 trillion won (US$8.5 billion), exceeding analyst estimates, according to a Daishin Securities Co report last week.
“The trade data path is healthy and shows a pattern of gradual recovery that can be sustained for some time,” said Leong Wai Ho (梁偉豪), a senior regional economist at Barclays in Singapore.
“But it will be uneven with a few speed bumps,” with disruptions related to snowstorms and US tax increases and federal spending cuts, he said.
The Bank of Korea probably will not ease monetary policy until at least March, after Park’s inauguration, Leong said. Park, who takes office next month, has vowed to spend 131.4 trillion won on programs such as free childcare and support for the indebted poor.