Korea: Merchandise exports decline for first time in two years in October
November 1, 2022
Merchandise exports fell 5.7% in annual terms in October, on the heels of September’s 2.7% rise. October’s outturn marked the sharpest fall since August 2020. Meanwhile, merchandise imports climbed 9.9% in annual terms in October (September: +18.6% yoy), marking the weakest reading since January 2021.
As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 6.7 billion deficit in October (September 2022: USD 3.8 billion deficit; October 2021: USD 1.8 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 33.0 billion deficit in October, compared to the USD 24.5 billion deficit in September.
The decline in October was driven by a 17.4% drop in chip exports, which was provoked by weakening economic activity in China and a fall in semiconductor prices.
Analysts at Nomura commented on the trade outlook:
“With slowing global demand and inventory destocking, we expect the downturn in export growth to continue, accelerating the manufacturing-led recession and increasing downside risks to the current account, which we expect to move into a deficit again in October. This is due to a wider-than-expected trade deficit in October, which will likely move the current account into deficit in Q4–which would be the first time since Q1 2012.”
Author: Matt Cunningham, Economist