By Joori Roh and Jihoon Lee
SEOUL (Reuters) – South Korea’s exports likely shrunk for a sixth straight month in August, as effects from fewer working days outweighed a gradual recovery in global demand as more countries relax coronavirus lockdowns, a Reuters poll showed on Friday.
August shipments were expected to have contracted 11.5% from a year earlier, according to a median estimate of a Reuters poll of 11 economists, compared with a 7.0% drop in preliminary data for the first 20 days of the month and a 7.1% decline in July.
There were 22 working days in August, 1.5 days less than last year.
“The sharper decline in August exports is due to fewer working days … The average per-day exports, however, were seen shrinking at a slower pace, underpinning continued recovery momentum,” said Lee Sang-jae, economist at Eugene Investment & Securities.
Other economists also believe exports are slowly turning the corner, given improving demand from the nation’s major trading partners China and the United States, particularly for electronics.
South Korea’s economy relies heavily on trade, with exports and imports accounting for 63.7% of its 2019 nominal GDP.
On Thursday, the Bank of Korea sharply downgraded its 2020 economic projection to a 1.3% contraction, the worst in more than two decades, from a previous forecast for a 0.2% decline, given a resurgence in virus infections.
South Korea has reported triple-digit daily jumps in new cases for over two weeks, but the government stopped short of shifting the country up to the highest level of social distancing measures on Friday, as it stood cautious about further economic fallout.
August imports were expected to tumble 15.2% year-on-year, far worse than a 11.6% plunge in July.
“Imports will continue to shrink by a double-digit rate as a resurgence in coronavirus slows recovery in domestic demand,” said Ha Keon-hyeong, Shinhan Investment Corp economist.
Meanwhile, 10 economists predicted industrial output in July would rise by a seasonally adjusted 1.9% month-on-month, slower than 7.2% in June, but they worry data going forward may worsen, reflecting the virus spread.
Ten economists also estimated consumer prices would rise a median 0.4% in August from a year earlier, faster than 0.3% in the previous month.
(Reporting by Joori Roh; Editing by Kim Coghill)
