By Jihoon Lee
SEOUL (Reuters) – South Korea’s exports likely snapped a year-long downturn and swung to growth in October on solid demand in the United States and rising shipments of chips though soft shipments to China dragged, a Reuters survey showed on Monday.
South Korea – a bellwether for global trade – is the first major exporting economy to report monthly trade figures, providing clues on the health of worldwide demand.
Outbound shipments from Asia’s fourth-biggest economy are expected in October to have risen 5.5% from the same month the year before, swinging from September’s 4.4% loss, the median estimate of 12 economists showed.
That would end a 12-month run of declines in exports through to September.
The growth in October was likely led by robust shipments to the United States and fuelled by a recovery in semiconductor exports, while base effects also provided support after a year-long downturn, economists said.
Weak demand in China, however, was still a headwind, they said.
“South Korea’s exports recovery will likely continue into next year,” said Chun Kyu-yeon, an economist at Hana Securities. “Robust trends are continuing in U.S. and EU-bound shipments, although China-bound exports still remain sluggish.”
In the first 20 days this month, South Korea exported goods worth 4.6% more than the year before. U.S.-bound exports jumped 12.7%, while those to China were down 6.1%.
“The trend of exports growth may continue on base effects, but the degree of recovery is expected to be weak,” said Park Sang-hyun, an economist at HI Investment Securities.
Meanwhile, amid higher oil prices, imports likely dropped 4.3% in October from a year earlier versus a slump of 16.5% in September, marking the mildest decline in eight months, the survey also showed.
That would bring the trade balance to a deficit in October, after four consecutive months in surplus. The median forecast in the survey tipped a deficit of $2 billion, a sharp turnaround from a surplus of $3.7 billion in September.
South Korea is scheduled to report monthly trade figures for October on Wednesday, Nov. 1, at 9 a.m. (0000 GMT).
(Reporting by Jihoon Lee)
