The imbalance worsens as South Korea’s exports in October hit their lowest level in 26 months.
Exports from South Korea fell by the most in 26 months, and its trade deficit persisted for a seventh straight month, showing that the region’s fourth-largest economy is in trouble and that its currency is still hovering around 13-year lows.
According to preliminary official data released on Tuesday, exports fell 5.7% from a year earlier in October to $52.48 billion. It was worse than the 3.0% decline and the worst percentage decline since August 2020.
Related: A Reuters poll says that South Korea’s exports will drop in October for the first time in two years.
Exports to China, its biggest market, fell 15.7% in October compared to the same month a year earlier as the second-largest economy in the world slowed down as a result of a number of factors, including tough regulations to stop the spread of COVID-19.
However, local markets showed a muted response to the bad news as investors turned their attention to the US. The Federal Reserve’s policy meeting is this week.
The outlook for the global economy is still gloomy due to an international wave of tightening of policies to fight inflation.
“There is little prospect of a quick recovery soon,” said Chun Kyu-yeon, an economist at Hana Securities, “since China’s demand will continue sluggish and the (global) semiconductor industry is witnessing steadily expanding inventory levels.”
According to a survey by S&P Global of purchasing managers at South Korean manufacturing firms, new export orders fell in October as the world economy slowed for the eighth consecutive month.
Imports grew by 9.9% in October to reach $59.18 billion. As a result, the country recorded a $6.70 billion trade deficit, up from a $3.78 billion deficit in September and marking the sixth consecutive month that imports outpaced exports.
Related: Biden says the U.S. is ready to keep talking with South Korea about EV subsidies.
The country’s currency, which is already among Asia’s worst performers this year after losing 17% of its value in relation to the dollar since the end of 2021 and hanging close to its lowest level in over 13 years, recorded in late October, will be under additional pressure as a result of the deficit.
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