South Korea is likely to see its worst annual exports performance this year since the global financial crisis, economic reports showed Sunday, due to the global trade slowdown and a slump in the semiconductor market.
The value of South Korean goods exports is expected to plunge 10.2 percent on-year in 2019 on a customs clearance basis, according to Bank of Korea, the worst drop since 2009 when the country suffered 13.9 percent decline.
Private economic think tanks released similar forecasts. LG Economic Research Institute projected a 9.9 percent on-year decline, while Hyundai Research Institute expected a 9.1 percent on-year fall in exports.
Experts said reduced global trade volume, sparked by the US-China dispute, and a slump in the semiconductor market are dragging down South Korean shipments this year.
The World Trade Organization recently said global merchandise trade volumes are expected to rise by only 1.2 percent in 2019, a sharp cut from its previous forecast of 2.6-percent growth.
World Semiconductor Trade Statistics forecasted a 12.8-percent decline in overall semiconductor sales this year from a year earlier due to lower demand and decline in semiconductor prices.
South Korea, home to Samsung Electronics Co. and SK hynix Inc., relies heavily on chip exports. Semiconductors account nearly one-fifth of the country's exports.
"South Korea's exports declined sharply due to the slump in semiconductors and drop in international oil prices," said Lee Geun-tae, a researcher at LG Economic Research Institute. "The rate of decrease can be temporarily lower in the first half of 2020, but overall, exports are likely to remain stagnant."
The situation isn't likely to change even accounting exports in real terms, which eliminates influences from price changes.
BOK estimated a 0.4-percent decline in this year's real merchandise exports, the worst drop since 1.9-percent fall in 2001 when the economy was hit by the so-called dot-com business bubble.
Market watchers expect South Korean exports to rebound next year, but are split on when the country could see a positive turnaround in shipments.
Korea Development Institute projected a 2.8 percent increase in next year's real merchandise exports, while BOK expected a 2.2 percent increase.
"South Korea's exports performance will improve if the global economy gets better," Choi Woo-jin, a researcher at KDI, said. "But uncertainties are high regarding the bottom point of the export economy and how much exports will rebound." (Yonhap)