South Korean Economy Slowing, October Exports Fall 5.7%

South Korea’s exports sank in October by the most in more than two years, while the country recorded a trade deficit for a seventh month.

The latest data shows that Asia’s fourth-largest economy is slowing and its currency has dropped close to 13-year lows.

The government held a meeting of senior officials from more than 10 ministries and agencies hours after the data was released on Tuesday.

It later pledged to “make every effort” to boost exports, but noted that any near-term turnaround would be difficult.

Exports fell 5.7% from a year earlier to $52.48 billion in October, preliminary government data showed, the fastest drop since August 2020, and worse than a median 3.0% loss predicted in a Reuters survey.

Exports to China Down Over 15%

Exports to China, its largest market, fell 15.7% in October from a year earlier as the world’s second-largest economy is slowing from a mix of factors, including strict restrictions to stop the spread of Covid-19.

Local markets, however, showed a muted reaction to the sluggish data as investors focused on the US Federal Reserve’s policy meeting this week.

“There is little hope for a sharp turnaround soon as China’s demand will remain weak and the (global) semiconductor industry is experiencing still growing inventory levels,” Chun Kyu-yeon, an economist at Hana Securities, said.

A survey by S&P Global of purchasing managers at South Korean manufacturing companies also showed new export orders in October fell for an eighth consecutive month as the global economy is slowing.

Imports jumped 9.9% to $59.18 billion in October. As a result, the country posted a trade deficit of $6.7 billion, bigger than a shortfall of $3.78 billion in September and the seventh consecutive month of imports outweighing exports.

The deficit will further pressure the country’s won currency, already among Asia’s poorest performers this year, down 17% of its value from end-2021 against the dollar and hovering near its weakest in over 13 years set in late October.