South Korea's December exports to fall for third month as China demand still weak

South Korea's exports likely extended their falling streak to a third straight month in December, a Reuters poll showed on Wednesday (Dec 28), with demand from China yet to recover from loosening COVID-19 restrictions.

The country's outbound shipments were projected to have fallen 10.1 per cent in December from the same month a year ago, according to the median forecast of 12 economists.

That would be the third straight month of year-on-year declines, after a 14 per cent loss in November, which was the biggest in two-and-a-half years, and 5.8 per cent in October. "South Korea's exports are under pressure from declining exports to China, where the economy still remains sluggish even after easing of its COVID-19 restrictions, and weak sales of IT products, mainly semiconductors," said Park Sang-hyun, chief economist at HI Investment and Securities.

"Moreover, global economic slowdown is materialising, so exports are likely to continue the falling trend for the time being."

China has eased some of its most stringent restrictions to fight COVID-19 since last month.

During the first 20 days of December, South Korea's exports shrank 8.8 per cent from the same period a year ago. Those to China dropped 25.5 per cent, outweighing gains in US and EU-bound shipments, in likely the seventh consecutive falling month.

Meanwhile, imports were expected to have fallen at a much milder pace of 0.6 per cent in December, after a 24-month gaining streak through November.

Altogether, the trade balance is set to remain in deficit for a ninth consecutive month. It is also on track for the first annual shortfall in 14 years and the largest-ever.

Full monthly trade data is scheduled for release on Sunday at 9am.

The survey also forecast the country's consumer price index for December to be 5 per cent higher than a year ago, the same as in November, when the annual inflation rate hit a seven-month low.

On factory output, economists expected production to have fallen 0.8 per cent on a seasonally adjusted monthly basis, which would be slower than 3.5 per cent in October and the slowest in likely its five-month falling streak.