By Jihoon Lee
SEOUL (Reuters) -South Korea’s exports fell at a less steeper pace in August than in the previous month and market expectations, raising some hopes that the key trade engine of the economy is starting to turn a corner though doubts remain over weak demand in China.
Overseas sales from Asia’s fourth-largest economy fell 8.4% year-on-year to $51.87 billion in August, trade data showed on Friday, after a 16.4% drop in July – the worst in six months.
The August figure was better than the median forecast for an 11.6% decline in a Reuters survey of economists, beating all but one of 22 estimates.
The decline in China-bound exports softened to 20% from 25% the previous month, while shipments to the United States rose 2% after four months of decline. Those to the European Union also swung back to positive with a 3% rise.
Exports of semiconductors fell 21%, milder than the 34% fall of the previous month, and petrochemical products lost 12%. However, automobiles rose 29% and ships jumped 35%.
“The data suggests that exports have already hit the bottom in July,” said Stephen Lee, chief economist at Meritz Securities.
“Poor external conditions are improving little by little, but there still is uncertainty over the Chinese economy, with a possibility of real estate troubles dragging down domestic demand.”
It was the 11th consecutive month South Korea’s exports fell on an annual basis, the longest period since January 2020. The government expects exports to swing to growth from October.
“Despite the seasonal factor of summer vacations, the trade balance remained in surplus on robust exports of major products, such as automobiles and machineries, and an improvement in semiconductor exports,” Trade Minister Lee Chang-yang said.
Imports fell 22.8% to $51 billion, after a 25.4% drop the month before. Economists had expected a 23.2% decline.
As a result, South Korea posted a trade surplus of $0.87 billion in August – after a surplus of $1.65 billion in July and $1.15 billion in June – in contrast to most economists’ predictions for a deficit.
(Reporting by Jihoon Lee; Editing by Christopher Cushing and Shri Navaratnam)