(Bloomberg) -- South Korea’s trade data indicated the trend toward declining exports moderated further in the first part of September, raising hopes for a return to growth later this year.
Daily shipments decreased 7.9% on average in the first 20 days of the month compared with a year earlier, the customs office said Thursday. That’s a smaller drop than the 8.3% decline for the full month of August. Total exports advanced 9.8%, as there were more working days compared with the same period last year.
The report helps lend credence to predictions by Korean policymakers in recent weeks that exports could return to growth before the end of the year. Korean authorities are pinning hopes on rebounding exports to help the economy achieve 1.4% growth this year.
“For now it’s clear exports are bottoming out,” said Oh Suk-tae, an analyst at Societe Generale. “We are likely to see a return to growth in the fourth quarter, but uncertainty remains over what will help sustain the growth next year.”
Key to any bounce will be prices for semiconductors that drive the country’s exports. Global semiconductor sales, one indicator of demand, have started to show signs of resilience in recent months, according to the Semiconductor Industry Association.
Korea is one of the world’s largest exporters, shipping a wide range of goods to markets around the world. As a result, the country’s exports serve as a useful indicator of the health of the global economy.
Korean exports have been sluggish since late last year as chip demand slackens and China’s economy languishes. The trade balance remains under pressure as energy prices stay elevated and the won deteriorates, increasing the tally for imports.
The large discrepancy between the daily average of shipments and the headline number stems from the fact Korea’s Chuseok holiday fell in the middle of September last year, while it will begin later this month this year, according to Oh. Workers often extend their breaks by taking extra days off around official holidays.
Headline exports of semiconductors fell 14.1% for the first 20 day of September compared with last year. Shipments of cars rose 49.1%. Exports to the US rose 30.5% while those to China dropped 9% for the same period, the report showed. The customs office didn’t release daily average shipments separately for the breakdown.
(Updates with a chart and economist’s comment)
©2023 Bloomberg L.P.