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Disappointing October Trade Update


South Korean trade data disappointed on the downside. Export growth fell to -5.7% y/y, versus -2.1% expected. Import growth was firmer, +9.9% y/y, against a +6.6% expectation. This saw the trade deficit balloon back out to -$6.7bn, nearly double the consensus estimate of -$3.5bn.

  • This is the weakest y/y export print since August 2020, when the global economy was emerging from the Covid induced recession. Accounting for working day effects didn't improve the picture, with this number down -7.9% y/y.
  • The detail showed export growth to China down -15.7%, while chip exports fell by 17.4% y/y. Exports to the US held up better, +6.6%.

Fig 1: South Korean Export Growth - Total & To China Y/Y

Source: MNI - Market News/Bloomberg

  • Energy imports surged to +42% y/y, driving the upside import surprise. This unwound some of the recent improvement in the trade deficit and comes despite the further improvement in the Citi Korean ToT proxy, which we highlighted yesterday.
  • USD/KRW moved higher post the release, spot got above 1429, but we are now back to the low 1427 region, as firmer local equities (+0.90% for the Kospi) is helping sentiment.

Fig 2: South Korea Trade Deficit Improvement Proves Short-Lived

Source: MNI - Market News/Bloomberg

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