SEOUL: South Korean exports are forecast to decline in 2019, as outbound shipments contracted for two months in a row, economic organizations and observers said Wednesday.
The poor export showings in December and January marked the first time in 27 months that shipments have fallen in consecutive months on an annual basis and are an indication of tougher times ahead for Asia’s fourth-largest economy, experts here said.
Data by the Korea Customs Service showed exports down 5.8 percent from a year earlier to $46.35 billion in January, after contracting 1.2 percent on an annual basis in the last month of 2018.
Sung Tae-yoon, an economics professor at Yonsei University in Seoul, said the downturn is due to weaker global chip prices, with an unfavorable trade environment adversely affecting the country’s export prospects as a whole.
“South Korea seems to be losing its competitive edge in the export sector,” he claimed.
Reflecting this, most thinks tanks, trade-related organizations and brokerages warned outbound shipment growth of the world’s sixth-largest exporting nation may be halved in 2019, from the year before.
State-run Korea Development Institute and Korea Institute for Industrial Economics and Trade and Hyundai Research Institute, a private organization, all predicted that exports will grow some 3.7 percent during the year, compared with 2018.
The Korea Institute for International Economic Policy and Korea Institute of Finance are forecasting 2.5 percent and 2.1 percent growth, respectively.
Samsung Securities Co. adjusted export growth numbers from 5.5 percent to 2.5 percent, while Eugene Investment Co. downgraded the country’s export growth estimate from 3.5 percent to just 1 percent.
The Bank of Korea also warned that exports may contract 1.4 percent in 2019, from last year, with Fitch Ratings expressing concerns that the trade friction between the United States and China and the general slowdown of global economic growth will indirectly impact South Korea.
The United States and China are the top overseas markets for South Korean exports.
Despite the alarms being raised, South Korean Finance Minister Hong Nam-ki expressed confidence that exports will rebound in February, with the industry ministry stressing that the dip in outbound shipments is temporary and that numbers expected to move up in the coming months.
“The total volume of exports has grown at a solid pace,” it pointed out, emphasizing that sluggish growth is not likely to pose serious problems for the country.