South Korea said on Saturday exports in August set their sixth month of annual decline this year, the first evidence from an industrial powerhouse showing a sustained slump in global demand through the second month of the quarter. Exports by Asia's fourth-largest economy fell 6.2 percent in August from a year earlier to $42.97 billion while imports plunged 9.8 percent to $40.93 billion, generating a surplus of $2.04 billion, the Ministry of Knowledge Economy's data showed.
It was slightly better than a revised 8.8 percent drop in July and in line with a median 6.3 percent decline forecast in a Reuters survey of analysts, but fell far short of providing any sign of the global slump approaching its end. The latest figures brought overseas sales for the July-August period down 7.5 percent from a year before, casting doubts on a recent government projection for a modest annual gain in exports for the second half.
August imports now fell for the sixth consecutive month over a year earlier and set the sharpest annual decline in nearly three years, underscoring a sustained weakness in demand within the country for consumption and investment. The data bodes ill for the economic growth for the current quarter, during which the central bank had forecast gross domestic product would expand by more than 1 percent quarter-on-quarter after a weak 0.4 percent rise in the April-June period.
The Bank of Korea, alarmed by the economic slump continuing for a longer period than expected, cut interest rates in July in a shock move for the first time since the 2008-2009 global crisis and looks set for another cut as early as this month. The economy ministry is due to release more details later in the day, such as breakdown figures by market and product for the August 1-20 period, although a full-month analysis will be provided two weeks later.