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Stacked containers line a shipping port in Gwangyang, South Korea, Tuesday, June 14, 2022. /CFP
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 percent 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 percent in January from a year earlier, trade ministry data showed, worse than an 11.3 percent decline predicted in a Reuters survey and the fastest drop in exports since May 2020.
Imports fell 2.6 percent compared with a year earlier, less than a 3.6 percent 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.
The increasing chances of recession – two consecutive quarters of decline in GDP – 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 percent dive in semiconductor exports and a whopping 31.4 percent plunge in sales to China, the trade ministry data showed.
Both were the worst rates of decline since the global financial crisis from 2008 to 2009.
The government has forecast this year's exports would fall 4.5 percent after posting a 6.1-percent gain in 2022, and the trade ministry has said it would do what it can to avert a decline.
(Source: Reuters with edits)
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Disinformation report hotline: 010-85061466