South Korea’s China exports plunge 15.7 per cent, underscoring drop in semiconductor demand
- Drop in critical computer chip shipments – accounting for the bulk of South Korea’s exports – was reflected in the continued contracting of factory activity last month
- Although South Korea’s exports to China have decreased for five straight months, those to the US and EU increased in October
South Korea’s export growth rate turned negative in October for the first time in two years, driven by a fall in crucial semiconductor shipments as well as weakened trade with China, leading to South Korea’s overall trade deficit persisting for a seventh consecutive month.
Exports decreased by a worse-than-expected 5.7 per cent to US$52.48 billion compared with the same month in 2021, the South Korean Ministry of Trade, Industry and Energy said on Tuesday. This also represented the biggest percentage fall since August 2020, having declined for the first time since October 2020.
Export values of petroleum products and automobile parts increased as well, by 7.6 and 3.2 per cent, respectively. Both are among the country’s 15 major export products.
China’s weak growth has had a negative impact on inter-regional exports … China’s slowdown and the downcycle for semiconductors are expected to continue for a while
“[The drop in semiconductor exports is] mainly due to sluggish global demand and unfavourable price effects,” said Kang Min-joo, a senior economist at ING who focuses on the economies of South Korea and Japan.
“China’s weak growth has had a negative impact on inter-regional exports, while consumer demand in the developed markets has not yet fallen substantially.
“External demand conditions for semiconductors are not expected to improve in the short term, as China’s slowdown and the downcycle for semiconductors are expected to continue for a while.”
South Korea’s exports to China, Japan and the Association of Southeast Asian Nations (Asean) all decreased in October.