SEOUL: South Korea the world’s biggest exporter to China — is getting squeezed as weaker demand from its larger neighbor helped send its shipments tumbling the most since 2009.
The nation’s exports plunged 14.7 percent in August from a year earlier, an eighth straight monthly decline, as shipments to all its major markets fell, according to the trade ministry. Economists had forecast a 5.9 percent drop.
“August exports had been expected to be bad, but the data turned out to be even worse,” said Lee Sang Jae, a Seoul-based economist for Eugene Investment & Securities Co. “With China taking the largest share of Korea’s exports, it will be difficult to expect a recovery unless China’s economy improves.”
The slump is raising risks to growth in a nation that generates about half of its gross domestic product by shipping products overseas. Barclays Plc and Australia & New Zealand Banking Group Ltd. economists changed their calls for the Bank of Korea’s policy after the data, predicting the central bank will lower its key interest rate further this year.
As a supplier of mobile phone components, car parts and other intermediate goods to Chinese manufacturers, Korea is under pressure from weakening demand in its biggest export market. China’s official factory gauge fell in August to the lowest reading in three years.
