South Korea’s exports slump eased for a second month in May, an early sign that weakness in global demand may finally be starting to ease.
(Bloomberg) — South Korea’s exports slump eased for a second month in May, an early sign that weakness in global demand may finally be starting to ease.
Shipments adjusted for working-day differences fell 9.3% from a year earlier, the smallest decline since October, according to data released Thursday by the customs office.
Headline exports dropped 15.2%, less than economists’ expectations for a 16.3% decline, according to the trade ministry. Overall imports fell 14%, resulting in a trade deficit of $2.1 billion, the narrowest in a year.
Korean exports serve as a barometer of international trade as the nation sells items such as chips, displays and refined oil, which straddle supply lines. While the data indicates some recovery in demand for Korean goods, overall exports remain weak amid a surge in chip inventories and China’s lackluster economic expansion.
Kim Yumi, a market strategist at Kiwoom Securities Co., said she expects the slump to ease gradually and ultimately bottom out around June, speaking prior to Thursday’s data release.
China’s economic recovery weakened in May as manufacturing activity fell to the lowest level since December 2022. Meanwhile, South Korea’s semiconductor inventory surged by the most in seven years in April, underscoring ongoing weakness for chips.
The ongoing contraction in exports is set to weigh on South Korea’s economic growth. The Bank of Korea last week cut its forecast for gross domestic product growth in 2023 to 1.4%, citing lower exports and investments.
The South Korean won has weakened more than 4% against the dollar this year, making it one of the worst-performing currencies in Asia.
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