South Korean exports tanked by the most in six years in August – and here’s why you should take note.
The 14.7 percent on-year fall in exports last month was the steepest decline since August 2009 and well below economists’ forecasts in a Reuters poll for a 10 percent fall.
Economists say the slump is largely attributable to the slowdown in China, which is sapping demand for Korean goods. China is Korea’s largest export market, taking around one-quarter of its shipments abroad, according to Reuters.
“It started with investment-related industries, but now consumer export items will also be challenged due to asset price correction in China,” said Sharon Lam, economist at Morgan Stanley. 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,” said Lam, who refers to Korea as the “broken export machine”.