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Jan exports -16.6% y/y vs -11.3% in Reuters poll
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Exports to China -31.4%, exports of chips -44.5%
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Recession looms after -0.4% fall in Q4 2022 GDP
(Updates with new details on China, policy implications; adds
bullet points)
By Jihoon Lee and Choonsik Yoo
SEOUL, Feb 1 (Reuters) - South Korea's economy inched
toward its first recession in three years as data on Wednesday
showed its January trade deficit soared to a record thanks to a
plunge in exports caused by a combination of long holidays and
cooling global demand.
Asia's fourth-largest economy, which relies heavily on trade
for growth, shrank by 0.4% in the October-December quarter and
is now on the brink of falling into what would be its first
recession since the middle of 2020 during the height of the
COVID-19 pandemic.
Exports fell 16.6% in January from a year earlier, trade
ministry data showed, worse than an 11.3% decline predicted in a
Reuters survey and the fastest drop in exports since May 2020.
Imports fell 2.6% compared with a year earlier, less than a
3.6% drop predicted in the survey. As a result, the country
posted a monthly trade deficit of $12.69 billion, setting a
record amount for any month.
"I have a zero percent forecast for the first-quarter growth
but today's trade figures are definitely a minus to that," said
Park Sang-hyun, economist at HI Investment and Securities.
The increasing chances of recession - two consecutive
quarters of decline in gross domestic product - also underscore
growing bets in markets that the central bank's campaign of
raising interest rates since late 2021 has run its course.
Leading the sluggish trade performance in January were a
44.5% dive in semiconductor exports and a whopping 31.4% plunge
in sales to China, the trade ministry data showed.
Both were the worst rates of decline since the 2008/2009
global financial crisis.
South Korean bond yields fell across the board on the
growing bets for a less restrictive monetary policy ahead, while
stock and currency investors largely shrugged
off the monthly figures.
Finance Minister Choo Kyung-ho blamed long lunar New Year
holidays in China and a steep fall in computer chip prices
versus a year ago for the sharp declines in export values,
adding China's reopening would help ease the situation over
time.
"The government will mobilise all available policy resources
to help support a drive to boost exports so that the timing of
improvement in trade balance can be advanced," Choo said at a
meeting of trade-related officials, without elaborating.
The government has forecast this year's exports would fall
4.5% after posting a 6.1% gain in 2022, and the trade ministry
has said it would do what it can to avert a decline.
(Reporting by Choonsik Yoo and Jihoon Lee. Editing by Gerry
Doyle and Lincoln Feast.)
