South Korean Exports Fall to 14.7 Percent - The Lowest in Six Years
South Korea exports dive at 14.7% as of August this year - the lowest percentage ever recorded in six years. According to a report published Tuesday on The Wall Street Journal, this is a result of the slowdown in China, which is Korea's largest export destination.
The neighboring country covers a quarter of South Korea's shipments overseas, which mostly demands for goods. However, the second-largest economy worldwide is facing current market crisis and slowdown, which is expected to widely affect the export industry.
"It started with investment-related industries, but now consumer export items will also be challenged due to asset price correction in China," an economist at Morgan Stanley, Sharon Lam says. "China is going to export more which will compete directly with Korea in the global markets."
Aside from that, China's stock market has dropped, and resulting to a huge decrease in the prices of global shares.
"Korea is thus not only exposed directly to weaker Chinese demand but also to indirectly via the deteriorating global commodity sector," an economist at HSBC, Frederic Neumann, says.
The decrease of oil prices and the depreciation of Korean petrochemical and refined oil products are among the factors that contribute to the overall fall of South Korean exports, according to officials in Seoul.
The fall of exports, particularly shipments to neighboring China, should be considered a structural problem, according to the economist of Mirae Asset Securities, Park Hee Chan.
"China has increasingly no need for Korean-imported goods," he comments.
He adds that South Korea's refinery, steel industries and petrochemical will most likely be affected by the slumping exports.
Aside from this, shipbuilding companies, which have long been struggling financially, are affected. Daewoo Shipbuilding & Marine Engineering Co. will reportedly cut down around a third of its operations, which is one of its major overhaul strategies that include laying off employees, removing non-core assets and selling its headquarters.
