SEOUL (Reuters) - South Korea’s exports likely contracted for a 13th straight month in December, though at a much slower pace, as stabilizing chip prices and a recovery in Chinese demand offered a ray of hope for the trade-reliant economy.
Overseas sales in December were seen falling 6.0% from a year earlier, according to the median forecast of 11 economists polled, the slowest contraction since April, when exports fell a revised 2.1%.
The projected December fall, much better than a 14.4% decline seen in November, is expected to end a sequence of double-digit percentage declines that has lasted six months, a majority of economists said.
“Along with a strong base effect, stabilizing prices for semiconductor, oil and petrochemical products had a positive effect,” said Ahn So-eun, economist at IBK Securities.
Preliminary data showed South Korea’s exports slid 2.0% in the first 20 days of December from a year earlier, the slowest fall in a year, offering signs that a year-long run of declines may be nearing its end.
The contraction in exports began in December last year as the economy, Asia’s fourth-largest, has been one of the nations worst-hit by cooling global demand in the wake of the U.S.-China trade war.
Last week, the finance ministry trimmed its economic growth target for next year to 2.4% from an estimated 2.0% rise this year, the worst in a decade, even after two rate cuts and aggressive budget spending.
“There will be one or two quarters of time-lag before the import demand improves, helped by global monetary easing seen in the second half this year,” Lee Seung-hoon, chief economist at Meritz Securities, said.
South Korea cut key policy rate KROCRT=ECI twice in July and October, joining a global easing trend, to support its faltering economy.
The Reuters poll also forecast that South Korea’s consumer prices rising a median 0.6% in December compared with a 0.2% gain in the previous month.
Economists also saw industrial output in November rising by a seasonally adjusted 0.5% from a month earlier.
November industrial output data will be published at 8 a.m. on Monday (2300 GMT Sunday), while inflation figures are expected at 8 a.m. on Tuesday (2300 GMT Monday). Statistics Korea will also announce the inflation figure for the whole of 2019 on the same day.
December trade data, which is due at 9 a.m. (0100 GMT) on Jan.1, will be the first monthly foreign trade data to be published by a major exporting economy.
Reporting by Joori Roh