Korea: Exports contract for the 14th-consecutive month in January, and the outlook remains grim
Merchandise exports decreased 6.3% year-on-year in January, which was down from the 5.3% drop recorded in December, totaling USD 43.3 billion in January (December: USD 45.7 billion). Meanwhile, merchandise imports fell 5.3% in January, notably sharper than December’s 0.8% fall, and totaling USD 42.7 billion (December: USD 43.7 billion).
The merchandise trade surplus narrowed to a seven-year low of USD 0.5 billion in January from USD 1.1 billion in the same month a year prior (December 2019: USD 2.0 billion surplus). Meanwhile, the 12-month moving sum of the trade balance narrowed to a USD 38.6 billion surplus in January from the USD 39.2 billion surplus in December.
The Korea-Japan political rift likely continued to weigh on trade between the two economies, while shipments to China were also down notably in January. Looking ahead, an expected recovery in global demand for tech, and consequently semiconductor prices should provide a significant boost to Korea’s merchandise exports. That being said, still-frosty relations with Japan and a stronger-than-previously-expected slowdown in China could weigh heavily on the external sector.