South Korean Export Growth Expected to Slow Further in September

South Korea’s export growth is expected to continue its slowdown in September. The survey, conducted between September 23rd and 27th, forecasts a 6.5% year-on-year increase in exports for September, marking the slowest growth rate in three months. This follows a 11.2% rise in August and a 13.5% increase in July.

Several factors are contributing to the deceleration in export growth, including a weakening global manufacturing cycle, high comparison bases from the previous year, and a sluggish Chinese economy. Additionally, unfavorable calendar effects, including a longer break for the Chuseok lunar thanksgiving holiday in September, likely impacted exports.

“The slowdown in export growth is becoming increasingly evident,” said Park Sang-hyun, an economist at iM Securities. “The global manufacturing cycle is weakening, and we are facing challenging year-on-year comparisons.”

South Korea, a major exporting economy and a bellwether for global trade, is the first major country to release monthly trade figures, providing an early glimpse into the state of international demand. Its exports had been growing steadily since October 2023, driven primarily by semiconductor shipments to the United States, fueled by demand related to artificial intelligence.

However, recent data suggests that this growth engine is losing steam. “The growth in memory chip exports is weakening, and no other product is emerging as a strong enough driver to offset the decline,” said An Ki-tae, an economist at NH Investment Securities.

Concerns about a potential slowdown in the U.S. economy and the persistent weakness in China’s economy are also weighing on South Korea’s export outlook.

Key Takeaways:

• South Korean export growth is projected to slow to 6.5% in September, the slowest pace in three months.
• The slowdown reflects a weakening global manufacturing cycle, challenging year-on-year comparisons, and a sluggish Chinese economy.
• Semiconductor exports, a key growth driver, are showing signs of weakness.
• Concerns about a potential slowdown in the U.S. economy and the persistent weakness in China’s economy are further dampening the export outlook.

South Korea’s slowing export growth underscores the challenges faced by export-oriented economies amidst a global economic slowdown and rising geopolitical uncertainties. The upcoming release of official trade figures on October 1st will provide further insight into the state of global demand and its potential implications for other exporting nations.