SEOUL: South Korea’s exports fell for a 12th straight month in December, capping its worst yearly trade performance since the 2008-2009 global financial crisis, and the government warned there was no quick turnaround in sight.
Low oil prices, slowdowns in China and other emerging economies and weakness in Europe sent global trade plunging this year, dealing a sharp blow to trade-reliant Asian countries which rely heavily on exports of manufactured goods such as petrochemicals and electronics.
South Korea’s exports in December fell 13.8 percent in dollar terms from a year earlier, while imports slumped 19.2 percent, the Ministry of Trade, Industry and Energy said on Friday, both lagging forecasts in a Reuters poll and weaker than declines of 4.8 percent and 17.6 percent in November.
Exports for all of 2015 dropped 7.9 percent – the worst since a 13.9 percent decline in 2009 – but are expected to rise 2.1 percent in 2016, the ministry said, while adding there were downside risks to the forecast.
“Sluggish growth in China, sustained low oil prices and stunted growth in emerging economies due to higher rates in the U.S. pose risks to exports this year,” the ministry said in a statement.
South Korea is the world’s sixth-largest exporter and the first major country to publish December trade figures.
Its sales to China dropped 5.6 percent in 2015, sales to the European Union fell 6.9 percent and shipments to the United States slipped 0.6 percent. The three markets take nearly half of South Korea’s total exports.
Oil-related products accounted for 64 percent of the decline in South Korean exports this year, the trade ministry said.
Asia, which accounts for more than one-third of global exports by dollar value, saw a 7 percent drop in exports in the first nine months of 2015, against a 13 percent fall in global exports, World Trade Organisation data showed.
Data on Friday showed activity in China’s vast manufacturing sector contracted for a fifth month in a row in December, reinforcing fears the world’s second-largest economy may be stuck in a protracted slowdown despite a flurry of stimulus measures.
In December alone, South Korea’s shipments to China dropped 16.7 percent on-year in their worst fall since May 2009.
In 2016, exporters of household electronics, semiconductors, ships, steel products and flat screen displays are all likely to suffer, according to the ministry’s forecasts, but oil product exporters could see sales pick up from weak 2015 levels.
“Considering recent data, fourth-quarter growth will probably be worse than the Bank of Korea’s expectations while first-quarter growth is also unlikely to be rosy,” said Park Sang-hyun, chief economist at HI Investment & Securities.
Still, Park believed the central bank will keep interest rates on hold at a record low of 1.50 percent throughout 2016, albeit with a slight easing bias in the first quarter.
Concerns about high household debt levels and corporate debt pressures in the face of rising interest rates abroad could stay the Bank of Korea’s (BOK) hand, Park said.
The BOK cut rates four times between Aug. 2014 and June 2015 by a total of 100 basis points.
The BOK currently sees 2015 growth at 2.7 percent.