South Korean export decline slows on China shipments rebound

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South Korean exports marked the smallest decline in eight months in December with a rebound in shipments to China heralding a much-awaited recovery in global trade next year. Exports from Asia’s fourth-largest economy, seen as a bellwether for the region’s technology supply chain, fell 5.2 per cent in the final month of 2019 from a year earlier, extending the decline to a 13th consecutive month. But it was the best performance since a 2.1 per cent fall last April and almost half the average rate of decline seen over the past six months amid signs of an end to the cyclical downturn for the memory chip market and hopes that Washington and Beijing will complete a “phase one” deal and move towards ending their trade war. South Korea is the world’s leading exporter of memory chips, cars and ships and the first major economy to report trade data each month, providing an early glimpse into the state of the global economy. Last year, the export-driven nation was on track for its worst performance since the global financial crisis a decade ago, battered by China’s economic slowdown, the lengthy US-China trade war, and the memory chip market slump. Its exports dropped 10.3 per cent for the whole of 2019. But the government expects its outbound shipments to grow 3 per cent this year amid increasing optimism about global trade and the semiconductor industry cycle. Shipments to China, the country’s biggest export market that takes in a quarter of South Korea’s exports, rose 3.3 per cent in December, marking the first growth in 14 months. Exports of semiconductors, South Korea’s biggest export item accounting for about a fifth of the country’s exports, slid 17.7 per cent last month, but it was the slowest decline in eight months. The central bank expects the economy to grow 2.3 per cent this year, up from an estimated 2 per cent last year. It said recently that months of declines in exports and investments in new factories would end in 2020. Reviving the sluggish economy is the top priority of South Korean President Moon Jae-in ahead of national elections in April. Seoul has rolled out its biggest fiscal stimulus programme since the global financial crisis and the Bank of Korea has cut interest rates to a record low of 1.25 per cent. “Global trade seems to be picking up amid easing uncertainties over the trade war,” said Park Sang-hyun, economist at Hi Investment & Securities. “South Korea’s exports are likely to rebound in February and the country’s economic performance this year will be better than last year.”

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