South Korea’s exports fell the most in almost six years in May, underscoring concern that the slump in overseas sales is harming a recovery in Asia’s fourth-biggest economy.
Shipments slid 10.9% from a year earlier, the fifth straight monthly decline, the Ministry of Trade, Industry and Energy said on Monday. Imports fell 15.3% and the trade surplus was $6.32 billion, Bloomberg reported.
Weak exports come amid increasing debate about the impact of the Korean won’s strength versus the yen and euro. This could prompt a rate cut by the Bank of Korea this month, according to analysts at Nomura Holdings Inc. and SG Securities Co.
“There are debates whether rate cuts affect exchange rates and export performance,” Oh Suk Tae, a Seoul-based economist for SG Securities Co, said before the release. “But with domestic demand also just recovering, the BoK can’t just sit back.”
Central bank governor Lee Ju Yeol has said that while sluggishness in exports isn’t confined to Korea, the impact on the nation’s economy is large given its reliance on external markets.
A slowdown in global trade, fewer working days due to a public holiday in Korea and lower prices for petrochemical products contributed to the weaker data in May, the trade ministry said in a statement. The figures were in line with economists’ forecasts.
Overseas shipments should improve in June on car exports and higher prices for petrochemical products, said the ministry.
The won strengthened to more than a seven-year high against the yen in May, before trading at 8.96 versus the Japanese currency as of 8.51am Bangkok time. The currency was at a nine-year high against the euro in April, data compiled by Bloomberg show. It has weakened versus the dollar this year.
