By Jihoon Lee
SEOUL (Reuters) – South Korean export growth rate likely rebounded in July, but remained in the single-digit level, a Reuters poll showed on Thursday, while consumer inflation is seen accelerating to a fresh 24-year high.
Outbound shipments in July were projected to grow 9.4% from year-ago levels, according to the median forecast of 11 economists, climbing from 5.2% expansion in June.Exports in June grew at their slowest pace in over 1-1/2 years as soaring inflation saps offshore demand for Korean goods.
The export growth rate in July is expected to rebound from a 19-month low hit in the previous month, also dragged down by temporary factors such as truckers’ strike and calendar effects.
Still, economists saw the growth momentum to be on a slowing trend amid weakening overseas demand with soaring inflation and monetary tightening, while China’s COVID-related restrictions continued to add pressure.
“Export growth is seen remaining in the single-digit level, especially with negative impact from shipments to China that are yet to normalise,” said Park Sang-hyun, chief economist at HI Investment and Securities.
“As economic slowdown is becoming more and more evident in advanced countries such as the United States and Europe, exports are expected to continue their single-digit growth for the time being.”
South Korea’s exports for the first 20 days of this month grew 14.5% from the same period a year before, but those to China, its largest trading partner, fell 2.5%, after a 0.8% decline in June.
Imports were expected to grow 20.7% in July, slightly faster than 19.4% in the previous month, and bring trade balance to a deficit for a fourth consecutive month.
Full monthly trade data will be available on Aug. 1.
The survey also showed the consumer price index to rise 6.3% on a yearly basis in July, accelerating from 6% reported in June and hitting the highest since November 1998.
“The CPI growth will likely peak out in July. Still, it will continue to stay above 5% until October, justifying the Bank of Korea’s additional rate hike,” said Lee Seung-hoon, chief economist at Meritz Securities.
Factory output was forecast to post a seasonally adjusted 0.4% decline in June from the previous month, following a 0.1% rise in May.
(Reporting by Jihoon Lee, Anant Chandak and Arsh Mogre in Bengaluru; Editing by Sherry Jacob-Phillips)
