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| ▲ Shipping containers are stacked at a pier in South Korea's largest port city of Busan, in this file photo taken Oct. 11, 2022. South Korea's exports slipped 20.2 percent on-year in the first 10 days of October due mainly to sluggish overseas sales of chips, according to data from the Korea Customs Service. (Yonhap) |
BOK report-exports prospects
S. Korea's exports likely to slow; uncertainty mounts for current account: BOK report
SEOUL, Oct. 19 (Yonhap) -- South Korea is expected to see sluggish exports for some time as demand from major markets, including the United States and China, wanes as a consequence of global monetary tightening and slowing growth, a central bank report said Wednesday.
The gloomy prospects for exports deepen uncertainty for the country's current account balance that turned to the red for the first time in four months in August as import bills for energy and raw materials mounted faster than overseas sales, according to the report from the Bank of Korea (BOK).
"Exports have been growing at a much slower pace recently following favorable performances until the first half, while imports remain high centering on energy products, which will likely have a negative impact on trade and current account balances," the report said.
In painting such a gloomy picture, the report cites weaker demand from major markets, including the U.S. and the European Union, as they are gripped by economic slowdown woes.
It also worried that demand for Korean products will decline in China as that country is expected to go through a prolonged economic slowdown considering its zero-COVID 19 policy that keeps strict antivirus restrictions in place and slumping real estate market.
The BOK report, in particular, said that IT exports will likely slow down "for the time being" as demand is expected to shrink from a spike during the coronavirus pandemic, with sales bound for China hit harder than other markets.
"Accordingly, our exports are expected to remain sluggish going forward," the report said.
South Korea's exports grew 2.8 percent on-year in September but imports surged 18.6 percent over the same period, resulting in a trade deficit of US$3.77 billion last month.
Imports have exceeded exports in South Korea since April, and it is the first time since 1995 that the country suffered a trade deficit for six months in a row.
The continuing trade deficit has weighed on the country current account, a major gauge of economic activities.
In August, the country posted a current account shortfall of $3.05 billion, a sharp turnaround from a surplus of a revised $790 million tallied a month earlier.
This marked the first time in four months that the country has posted a current account deficit. The country last posted a shortfall of $79.3 million in April.
With exports likely to remain sluggish and shortfalls in the service sector forecast to increase due to more outbound travel amid eased virus curbs, the report predicted that the country's current account balance will go through "high volatility" going forward.
Earlier, the BOK said that the August shortfall in current account was temporary and will likely return to a surplus in September as trade deficit is on the decline.
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