South Korea’s Export Plunges 14.7 Percent In August In Its Eighth Month Consecutive Decline, According To The Trade Ministry

by Czarelli Tuason / Sep 11, 2015 05:02 AM EDT

Sale signs displayed on South Korean shops as the country sufferrs its biggest fall in exports in August | By: Ed Jones | Getty Images

South Korea's exports have dropped 14.7 percent last month, the sharpest decline ever recorded in the country's history since 2009.

"August exports had been expected to be bad, but the data turned out to be even worse," says Seoul-based economist for Eugene Investment & Securities Co Lee Sang Jae, as reported by Bloomberg on Sept 1. "With China taking the largest share of Korea's exports, it will be difficult to expect a recovery unless China's economy improves."

Economists attributes the decline to the recent slow growth in China, which has greatly affected the demand for South Korea's goods - considering that it is the country' largest export market, accounting to one-quarter of its shipment oversees.

According to a CNBC article last week, Morgan Stanley economist Sharon Lam has stated, "It started with investment-related industries, but now consumer export items will also be challenged due to asset price correction in China."

"Furthermore, as China moves up the value chain, it is relying less on goods from abroad."

"China is going to export more which will compete directly with Korea in the global markets," adds Lam, referring to South Korea as a "broken export machine."

The shocking decline in exports has led Morgan Stanley to lower its growth outlook for South Korea's economy to 2.3 percent in 2015 and 2.2 percent in 2016 from 2.5 percent and 3.2 percent respectively.

The Bank of Korea has predicted a 2.8 percent growth in economy for this year, while the finance ministry has predicted a 3.1 percent growth compared to 2014's 3.3 percent.

"As growth is likely to disappoint, we now the BoK [Bank of Korea] to cut rates once again in 4Q15 to bring the policy rate to an unprecedented 1.25 percent," explains Lam. "We believe this could take place as early as October."

The decline in exports for South Korea has been an added problem to the government on top of the recent Middle East Respiratory Syndrome (MERS) outbreak, which has caused great damage to the country's economy.