SEOUL: South Korea’s export growth is expected to slow sharply to a 20-month low in June, contributing to a record trade deficit, though the data will be dragged down by temporary factors, such as a trucking strike.
Consumer inflation, meanwhile, is seen accelerating to near 6%, a Reuters survey showed on Tuesday.
Outbound shipments for the month are projected to be just 3.8% higher than a year earlier, according to a median forecast of 23 economists.
Such a rise would make June the 20th consecutive month to show annual growth but would also be the weakest in that series of expansions and fall far short of the 21.3% gain seen in May.
But two temporary effects are suppressing exports this month.
One has been a week-long strike by truckers, which held up deliveries to ports; the other is the month having two fewer working days than June last year.
In the first 20 days of the month, exports were down 3.4% on a year earlier, but the rate of shipments per working day was up 11%.
“Going forward, export growth is likely to slow down as external conditions deteriorate,” said Lee Seung-hoon, chief economist at Meritz Securities. For the second half of 2022, “export growth will drop to high-single digit,” he said.
The poll found expectations for much faster import growth.
June imports would be 22.6% higher than a year earlier, according to a median estimate of 20 forecasts.
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The trade balance would be a $4.83 billion deficit, the largest in South Korean history, according to the median from 17 economists.
South Korea, Asia’s fourth-largest economy, logged a cumulative $7.83 billion trade deficit from January to May, putting it on course for its first annual deficit since 2008, amid sky-rocketing raw material and energy prices.
Full monthly trade data will be released on July 1 at 0900 a.m. (0000 GMT).
The consumer price index for June was seen 5.9% higher than a year earlier, accelerating from a 5.4% annual rise reported for May and hitting the fastest rate since July 2008, according to a median of 10 forecasts in the survey.
“The focus is on whether June inflation will exceed 6%,” said Oh Chang-sob, economist at Hyundai Motor Securities. “The central bank’s decision in July on how much to further increase interest rates will be based on this data.”
Factory output was forecast to post seasonally adjusted growth of 0.5% in May from the previous month, after shrinking in April by the most in nearly two years.
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