South Korea's Exports Extends Y/Y Export Decline To 10th Consecutive Month
October 14, 2019
South Korea could suffer a further setback if trade tensions between the United States and China, as well as another trade row with Japan, further drag on the global economy, a senior Standard & Poor's official has said. South Korea depends heavily on exports and foreign capital investment, a situation that makes it vulnerable to external shocks. In September, South Korea's exports fell 11.7 percent Y/Y to US$44.7 billion, extending their Y/Y decline to a 10th consecutive month due to weak prices of semiconductors and the yearlong trade row between the U.S. and China. About 40 percent of South Korea's exports go to the United States and China -- South Korea's top two trading partners and the world's two largest economies.
Exports to China fell 21.8 percent Y/Y and those to the U.S. fell 2.2 percent Y/Y.
Adding to woes over Asia's fourth-largest economy, Tokyo has been imposing tighter regulations on exports of three materials -- resist, etching gas and fluorinated polyimide -- that are critical for the production of semiconductors and flexible displays. In August, Japan also removed South Korea from its "whitelist" of trusted trading partners. Last month, South Korea also stripped Japan of its own list of trusted trade partners in a tit-for-tat measure. However, the ratings of Korea and Japan are unaffected, adding that the impact is small enough and their economies, the external position and the fiscal position, are resilient enough to absorb it at the current rating levels. South Korea's facility investment fell 12.3 percent Y/Y in the January-June period in the latest sign of the country's slowing economy. Last week, S&P revised down its growth forecast for South Korea's economy this year to 1.8 percent from its previous 2 percent forecast in July. S&P also said that the South Korean economy could grow 2.1 percent in 2020, also down from its previous forecast of 2.6 percent. South Korean Finance Minister Hong Nam-ki told lawmakers last week, "It appears difficult (for South Korea) to achieve its 2.4 percent growth target, but he said the government has no plan to revise down its economic forecast." In July, South Korea slashed its economic growth outlook for this year to between 2.4 percent and 2.5 percent from its previous forecast of between 2.6 percent and 2.7 percent in December, citing weak exports and sluggish investment. From: Yonhap