SEOUL: South Korean exports and imports in the first 20 days of January both fell, extending the slump that began last year and adding urgency to government efforts to reduce reliance on China, its biggest trade partner.
Exports for the Jan 1-20 period fell 8.9% from a year earlier to US$22.28bil while imports dropped 18.1% to US$20.86bil, the Korea Customs Service data said without elaborating. South Korea is the first country in the world to publish trade data every month, acting as a gauge for global demand.
Full-month figures will be issued by the trade ministry on Feb 1. Finance Minister Yoo Il-ho said after the data came out that South Korea needed to diversify export markets, a sentiment quickly reiterated by the trade ministry yesterday.
“South Korea must reduce its exports reliance on China and diversify export markets, and Iran, where a huge burden has been lifted regarding export ties, will serve as a new opportunity,” the trade ministry said. Earlier this week, data showed fourth quarter economic growth in China, South Korea’s biggest trade partner, slowed to 6.8% on-year, the weakest since the global financial crisis.
Although South Korea’s exports are widely expected to remain weak in January, data showed the weakness may be less severe than in December when exports in the Dec. 1-20 period last year fell 13.6% when adjusted for working day discrepancies.
“Oil remains a big uncertainty but exports will likely hit their bottom during the first quarter, although recovery thereafter will only be slow,” said Park Sang-hyun, chief economist at HI Investment & Securities.
As demand from its main customers softens, South Korea is aiming to boost exports to other countries, making its closest target Iran. Yoo said South Korea aims to double exports Iran in two years, with construction and shipbuilding firms seen to benefit from the recent lifting of international sanctions on Iran.
The trade ministry said South Korea will sign a US$2bil trade insurance financing deal with Iran while the country will be made eligible for its aid loan fund. The ministry added it will push for a joint venture in automobile assembly with Iran while a government-level meeting in Tehran will be held in late February this year.
The government will also continue to enforce measures that will boost South Korea’s competitiveness against countries that are already doing business with Iran, including China and India. South Korea’s exports to Iran accounted for 0.7% of total shipments in 2015.
