By Jihoon Lee
SEOUL (Reuters) – South Korea’s export decline likely accelerated in July amid persistently weak demand from China, a Reuters survey showed on Thursday, signalling a bumpy road towards recovery.
Outbound shipments were expected to extend their run of year-on-year losses to a 10th straight month with a 14.5% fall in July from the year before, according to the median estimate of 12 economists in the survey conducted during July 21-26.
That would be more than double the 6.0% loss in June, which was the slowest decline in eight months and had raised hopes for a turnaround in the months to follow.
Most economists cited a weak Chinese economy as the biggest factor weighing on South Korea’s exports, along with a slowdown in other major economies, while some also attributed the faster decline to a high base the previous year.
“Exports are still remaining sluggish due to a weaker recovery in the Chinese economy,” said Oh Chang-sob, economist at Hyundai Motor Securities.
“While China-bound exports continue to be weak, U.S.-bound shipments are also expected to fall this month,” said economist Park Sang-hyun at HI Investment Securities.
In the first 20 days this month, South Korea exported goods worth 15.2% less than the year before, customs agency data showed. Shipments to China and the United States dropped 21.2% and 7.3%, respectively.
South Korea – a bellwether for global trade – is the first major exporting economy to report monthly trade figures, providing clues on the health of world demand.
The survey also showed imports in July likely dropped 24.6% from a year earlier, much faster than 11.7% in June and the worst since September 2009.
Altogether, the country’s trade balance is expected to post a second straight monthly surplus. The median forecast was for a $3.11 billion surplus, wider than the $1.13 billion the previous month, when it snapped a 15-month streak of deficits.
South Korea is scheduled to report its full monthly trade figures for July on Tuesday, Aug. 1, at 9 a.m. (0000 GMT).
(Reporting by Jihoon Lee; Polling by Devayani Sathyan in Bengaluru; Editing by Jacqueline Wong)
