South Korean Exports Fall 7.8% in October
South Korean exports fall 7.8% in October, highlighting the impact of extended Chuseok holidays and tepid global demand on the nation’s trade-driven economy. As outbound shipments dropped to $30.1 billion from $32.7 billion a year earlier, markets are pricing in a November Bank of Korea rate cut to cushion the slowdown.
Export Decline and Holiday Effects
During the first 20 days of October, South Korean exports fall 7.8% year-on-year, a slump largely attributed to the shorter working period caused by the Chuseok festivities. With just 10.5 business days compared to 12.5 a year ago, the calendar distortion masked resilient daily export performance, which rose 9.7% when adjusted for working-day differences.
Sectoral Performance
While overall exports fell 7.8% in October, semiconductor shipments surged 47% to $8.5 billion on strong chip demand, accounting for 28.3% of total exports. In contrast, vehicle and petroleum sales contracted sharply, down 25% and 40% respectively, dragging the headline export figure lower.
Trade Deficit and Imports
South Korean exports fall 7.8% in October coincided with a 2.3% drop in imports to $32.9 billion, resulting in a $2.8 billion trade deficit. The widening deficit underscores the need for monetary support to sustain domestic consumption and investment as external headwinds intensify.
Monetary Policy Outlook
The Bank of Korea, prioritising financial stability amid elevated household debt, is widely expected to hold its policy rate at 2.50% this week despite exports falling 7.8% in October. However, a Reuters poll indicates 25 of 31 economists forecast a 25 basis-point cut in November to bolster growth and counter the export shortfall.
Market Reaction
Equity and currency markets adopted a “wait-and-see” stance as South Korean exports fall 7.8% in October. The KOSPI index edged higher in anticipation of stable rates this week, while the Korean won gained modestly on hopes of targeted easing in November rather than an immediate cut.
Disclaimer
This article is for educational purposes only and does not constitute financial advice.