Korea's exports tipped to turn around in Feb.: analysts

Published : Jan 2, 2020 - 17:11 Updated : Jan 2, 2020 - 17:17

South Korea's exports will likely rebound as early as February, analysts here said Thursday, citing a much-coveted global economic recovery and improving conditions in China.

The country's outbound shipments have shown a turnaround since the fourth quarter of 2019, with the pace of decline slowing to 16 percent, 12.4 percent and 1.4 percent in October, November and December, respectively, according to data from the trade ministry.

Overall, exports by Asia's fourth-largest economy fell 10.3 percent in 2019 after setting a record high performance the year before, due mainly to a slump in the global chip market coupled with the trade feud between the world's top two economies.

The country's outbound shipments came to $542.4 billion last year, compared with $604.8 billion posted a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy.

Jeong Sung-tai, an analyst at Samsung Securities Co., expected the country's monthly exports to turn around in February and the annual tally for 2020 to grow 4 percent from a year ago.

(Yonhap)

"The global economic recovery will boost trade, and exports will get a boost from a recovery in the chipmaking industry and the increasing stability in the Chinese economy," Jeong said, estimating the global economy will grow 3.5 percent in 2020, accelerating from last year's estimated 3.0 percent.

In a soothing point to the South Korean economy, the country's exports to China, its top trading destination, grew 3.3 percent in December, marking the first uptick in 13 months.

The improvement came in line with positive indices in China.

China's Caixin Purchasing Managers Index, a key gauge of activity in the country's factories, rebounded to 51.8 in November, marking the fastest expansion since December 2016. A reading above the 50-point mark indicates expansion, while a reading below the 50-point mark signals contraction.

"There has been widespread optimism that the US and China will sign the first round of their trade agreement within January,"

Oh Jae-young, an analyst at KB Securities Co., said.

Oh estimated the country's exports will grow 2.5 percent. He said the exports will pick up from February due to the national holiday season in January.

For all of 2019, exports of chips sank 25.9 percent on-year to $93.9 billion, while outbound shipments of machinery fell 1.8 percent to reach $52.5 billion.

The decrease in shipments of chips was attributable to a sharp decline in the global price of DRAM and NAND flash. Exports of chips surged 29.4 percent on-year in 2018.

Outbound shipments of automobiles moved up 5.3 percent to $43 billion last year, while that of petrochemical products decreased 14.8 percent to $42.5 billion, due mainly to sluggish global demand, according to the ministry.

For this year, the trade ministry expects exports to advance 3 percent on the back of a recovery in the chipmaking sector and eased concerns over the Sino-American trade row.

Given the rosy outlook for exports, the Bank of Korea expects the country's economy to grow 2.3 percent this year, accelerating from last year's estimated 2 percent expansion. (Yonhap)