SEOUL (Reuters) – South Korean exports likely shrunk for a fourth month but at a slower pace in June due to easing global virus lockdowns and more working days, yet a second wave of infection and Sino-U.S. tension were seen clouding near-term recovery, a poll showed on Monday.
Overseas sales were expected to decline 7.8% year-on-year, according to the median forecast in a Reuters poll of 12 economists. That compared with a 23.6% plunge in May and a 7.5% fall in preliminary data for the first 20 days of the month.
“The rate of contraction should have narrowed to a single-digit due to resumption of economic activities in some parts of the world and more working days in the month,” said Park Sung-woo, economist at DB Financial Investment.
Many economists see the export decline slowing further from the third quarter given signs of recovery in major economies, but major downside risks still lie ahead.
“With the second-wave infection, unemployment increase, and China-U.S. tensions clouding the near-term global outlook, the recovery path in exports is expected to be U-shaped in the second half of 2020,” said DBS economist Ma Tieying.
The poll also forecast that the country’s imports to tumble 9.6% year-on-year in June, much slower than a 21.0% plunge in the previous month.
Given the country’s high dependence on foreign trade – with exports and imports taking up 63.7% of 2019 nominal GDP – a growing number of analysts downgraded their economic projection for South Korea this year, with the International Monetary Fund now seeing a 2.1% contraction.
In the same poll, economists saw industrial output in May slipping a seasonally adjusted 1.4% from a month earlier, a smaller decline than the 6.0% of April. Industrial output data trail trade and some other data by a month.
Eleven economists also estimated consumer prices would slide a median 0.1% in June from a year earlier, compared with a 0.3% fall a month earlier.
(Reporting by Joori Roh; Editing by Christopher Cushing)
