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MNI INTERVIEW: S.Korea H2 Export Outlook Hit By Slowing China

MNI (Beijing)

South Korean exports will ease their slide in the second half of the year, but semiconductor sales to China will continue to contract sharply as the world’s second-largest economy slows, the chief researcher at the Korea International Trade Association told MNI.

While South Korea’s overall export performance should improve in H2, declining by only 3% y/y compared to a 12.4% fall from January to June, weak semiconductor exports to China will continue to weigh, said Jisang Hong in a interview.

“Overall, exports to China will record a double-digit contraction in H2,” he said, adding soft global electronic and IT demand will limit overall Korean exports. “There is still a further risk in H2 that the exhaustion of pent-up pandemic semiconductor demand will have a larger impact than people expect,” he added.

Global semiconductor sales fell 21% in May y/y, while international chip exports to China declined by 29%, according to data from the Semiconductor Industry Association.


The decline in semiconductor demand is also hitting China’s own exports, with the Ministry of Commerce in Beijing noting on Wednesday that the global downturn in the electronics industry had strongly impacted its trade performance in recent months. (See MNI BRIEF: China H2 Exports Resilient Despite Global Downturn - Bonds & Currency News | Market News)

China’s economy has continued to weaken, with retail sales growth falling to 3.1% y/y in June from May's 12.7%. MNI recently reported policymakers stand ready to implement monetary and fiscal measures in H2 to support the economy, following weak GDP and inflation prints. (See MNI INTERVIEW: China Stimulus To Boost Economy In H2 - Bonds & Currency News | Market News)

With its largest export destination slowing, South Korean exports have already started the second half poorly, falling 14.8% over the first 10 days of July, and snapping market hopes that June’s relatively modest 6.0% y/y decline represented a turnaround for the sluggish semiconductor business. June’s print, the smallest y/y decline in 2023, followed May’s 15.3% fall and April’s 14.4% drop, though Hong noted that the underlying trend for overall exports will only become apparent once irregular items are discounted from the data.

South Korea’s exports to China plunged by 43.8% in June, “which really highlights the continued challenge,” Hong said. Overall semiconductor exports slid 28% in the month, with H1 electronic machinery and parts shipments to China down 35% y/y.

Korean authorities will update July’s reading up to the first 20 days of the month on Friday.

MNI Beijing Bureau |

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