South Korea’s exports fell for a 12th straight month last month, capping its worst yearly trade performance since the 2008-2009 global financial crisis, and the government warned there was no quick turnaround in sight.
Low oil prices, weakness in Europe and slowdowns in China and other emerging economies sent global trade plunging last year, dealing a sharp blow to Asian countries, which rely heavily on exports of manufactured goods such as petrochemicals and electronics.
South Korea’s exports fell 13.8 percent in US dollar terms from a year earlier last month, while imports slumped 19.2 percent, the South Korean Ministry of Trade, Industry and Energy said yesterday, both lagging forecasts in a Reuters poll and weaker than declines of 4.8 percent and 17.6 percent in November last year.
Exports for all of last year dropped 7.9 percent — the worst since a 13.9 percent decline in 2009 — but are expected to rise 2.1 percent this year, the ministry said, but added there were downside risks to the forecast.
“Sluggish growth in China, sustained low oil prices and stunted growth in emerging economies due to higher rates in the US pose risks to exports this year,” the ministry said in a statement.
South Korea is the world’s sixth-largest exporter and the first major country to publish last month’s trade figures.
Its sales to China dropped 5.6 percent last year, sales to the EU fell 6.9 percent and shipments to the US slipped 0.6 percent. The three markets receive nearly half of South Korea’s total exports.
South Korea’s shipments to China last month dropped 16.7 percent on-year in their worst fall since May 2009.
Oil-related products accounted for 64 percent of the decline in South Korean exports last year, the ministry said.
Asia, which accounts for more than one-third of global exports by dollar value, saw a 7 percent drop in exports in the first nine months of last year, against a 13 percent fall in global exports, WTO data showed.
This year, exporters of household electronics, semiconductors, ships, steel products and flat-screen displays are all likely to suffer, according to the ministry’s forecasts, but oil product exporters could see sales pick up from weak levels of last year.
“Considering recent data, fourth-quarter growth will probably be worse than the Bank of Korea’s expectations, while first-quarter growth is also unlikely to be rosy,” HI Investment & Securities Co Ltd chief economist Park Sang-hyun said.
Still, Park said the central bank would keep interest rates on hold at a record low of 1.5 percent throughout this year, albeit with a slight easing bias in the first quarter.
Concerns about high household debt levels and corporate debt pressures in the face of rising interest rates abroad could stay the Bank of Korea’s hand, Park said.
The central bank cut rates four times between August 2014 and June last year by a total of 100 basis points.
The central bank currently forecasts growth at 2.7 percent for last year.
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