SEOUL: South Korea’s exports in May fell more than expected and for a sixth consecutive month from a year earlier, official data showed on Saturday, as expanding trade friction between the major economies darkened the prospects.
Overseas sales dropped 9.4 per cent in May from a year earlier, trade ministry data showed, worse than a median 5.6 per cent loss tipped in a Reuters poll. Imports edged down 1.9 per cent in May against a 0.4 per cent rise seen in the poll.
The bleak May trade data from South Korea, the world’s sixth-largest exporter, was the latest evidence of cooling global economy amid the prolonged trade friction between the United States and China.
“If there’s no concrete deal during the G20 summit period in late June, there will be additional tariff raises kicking in and it will give an additional huge impact globally,” said Park Sang-hyun, chief economist at Hi Investment & Securities.
The data came just hours after US President Donald Trump’s unexpected threat of tariffs on Mexican goods fed fears of recession in the major economies and sent global equity markets tumbling to their lowest in months.
South Korea’s trade ministry said the poor May exports were led by a 30.5 per cent drop in memory chip sales, while exports to China fell 20.1 per cent for their worst performance in more than three years with the giant neighbouring market.
The sluggish May exports, following a loss of 2.0 per cent in April, dash the South Korean government’s hopes that overseas shipments will begin recovering soon and pile pressure on the central bank to cut interest rates.
In April, the Bank of Korea trimmed its forecast for economic growth this year to 2.5 per cent from the previous 2.6 per cent, but economists now expect the central bank to deliver another downgrade when it reviews the projection in July.
On Friday, its monetary policy committee held the policy interest rate steady at 1.75 per cent, but a split vote in the decision gave a firm signal the central bank was shifting to a dovish stance to help support the economy.