South Korean exports retain single-digit growth in July; inflation at 24-year high

SEOUL: South Korean export growth rate likely rebounded in July, but remained in the single-digit level, a Reuters poll showed on Thursday, while consumer inflation is seen accelerating to a fresh 24-year high.

Outbound shipments in July were projected to grow 9.4% from year-ago levels, according to the median forecast of 11 economists, climbing from 5.2% expansion in June.

Exports in June grew at their slowest pace in over 1-1/2 years as soaring inflation saps offshore demand for Korean goods.

The export growth rate in July is expected to rebound from a 19-month low hit in the previous month, also dragged down by temporary factors such as truckers’ strike and calendar effects.

Still, economists saw the growth momentum to be on a slowing trend amid weakening overseas demand with soaring inflation and monetary tightening, while China’s COVID-related restrictions continued to add pressure.

“Export growth is seen remaining in the single-digit level, especially with negative impact from shipments to China that are yet to normalise,” said Park Sang-hyun, chief economist at HI Investment and Securities.

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“As economic slowdown is becoming more and more evident in advanced countries such as the United States and Europe, exports are expected to continue their single-digit growth for the time being.”

South Korea’s exports for the first 20 days of this month grew 14.5% from the same period a year before, but those to China, its largest trading partner, fell 2.5%, after a 0.8% decline in June.

Imports were expected to grow 20.7% in July, slightly faster than 19.4% in the previous month, and bring trade balance to a deficit for a fourth consecutive month.

Full monthly trade data will be available on Aug. 1.

The survey also showed the consumer price index to rise 6.3% on a yearly basis in July, accelerating from 6% reported in June and hitting the highest since November 1998.

“The CPI growth will likely peak out in July. Still, it will continue to stay above 5% until October, justifying the Bank of Korea’s additional rate hike,” said Lee Seung-hoon, chief economist at Meritz Securities.

Factory output was forecast to post a seasonally adjusted 0.4% decline in June from the previous month, following a 0.1% rise in May.