South Korea’s exports fell for a 12th straight month in December, capping its worst yearly trade performance since the 2008-2009 global financial crisis, and the government warned there was no quick turnaround in sight.
Low oil prices, slowdowns in China and other emerging economies and weakness in Europe sent global trade plunging this year, dealing a sharp blow to trade-reliant Asian countries which rely heavily on exports of manufactured goods such as petrochemicals and electronics, Reuters reported.
South Korea’s exports in December fell 13.8% in dollar terms from a year earlier, while imports slumped 19.2%, the ministry of trade, industry and energy said on Friday, both lagging forecasts in a Reuters poll and weaker than declines of 4.8% and 17.6% in November.
Exports for all of 2015 dropped 7.9%–the worst since a 13.9% decline in 2009–but are expected to rise 2.1% in 2016, the ministry said, while adding there were downside risks to the forecast.
“Sluggish growth in China, sustained low oil prices and stunted growth in emerging economies due to higher rates in the US pose risks to exports this year,” the ministry said in a statement.
South Korea is the world’s sixth-largest exporter and the first major country to publish December trade figures.
Its sales to China dropped 5.6% in 2015, sales to the European Union fell 6.9% and shipments to the United States slipped 0.6%. The three markets take nearly half of South Korea’s total exports.
Oil-related products accounted for 64% of the decline in South Korean exports this year, the trade ministry said.
Asia, which accounts for more than one-third of global exports by dollar value, saw a 7% drop in exports in the first nine months of 2015, against a 13% fall in global exports, World Trade Organization data showed.
In December alone, South Korea’s shipments to China dropped 16.7% on-year in their worst fall since May 2009.
In 2016, exporters of household electronics, semiconductors, ships, steel products and flat screen displays are all likely to suffer, according to the ministry’s forecasts, but oil product exporters could see sales pick up from weak 2015 levels.
“Considering recent data, fourth-quarter growth will probably be worse than the Bank of Korea’s expectations while first-quarter growth is also unlikely to be rosy,” said Park Sang-hyun, chief economist at HI Investment & Securities.
Still, Park believed the central bank will keep interest rates on hold at a record low of 1.50% throughout 2016, albeit with a slight easing bias in the first quarter.
Concerns about high household debt levels and corporate debt pressures in the face of rising interest rates abroad could stay the Bank of Korea’s hand, Park said.
The BOK cut rates four times between Aug. 2014 and June 2015 by a total of 100 basis points. The BOK currently sees 2015 growth at 2.7%.
