General

On November 1 local time, South Korean customs data showed that South Korea's exports in October decreased by 5.7% year on year, which was much higher than the 2.1% expected by economists.

According to customs data, South Korea's exports in October were 52.48 billion US dollars, while its imports increased 9.9% year on year to 59.18 billion US dollars. The trade balance showed a deficit of US $6.7 billion, almost twice the US $3.5 billion expected by economists.

South Korea's trade balance has been in deficit for seven consecutive months since April this year, which is the longest deficit in 25 years after the deficit for five consecutive months during the 1997 financial crisis (January to May). The trade deficit in October (US $3.77 billion) also expanded significantly month on month.

The South Korean Ministry of Trade said in the statement that the crisis in Ukraine, monetary tightening in major countries and the global economic slowdown had a significant impact on the decline of South Korean exports. At the same time, according to customs data, the base effect of the highest export in the same month in history (24.2% year-on-year growth) in October 2021 also played a role.

In addition, global chip sales have shrunk for the first time since the beginning of 2020, which has impacted South Korea's exports, which are highly adaptable to the industry and difficult to adapt to weak demand. According to data from the Washington based Semiconductor Industry Association, global semiconductor sales in September fell by 3% year on year. In the same month, the output of Korean chip manufacturers decreased by 3.5% over the same period last year, which was further worse than that in August.

Since this year, repeated outbreaks, Ukraine crisis and increased risks of geopolitical conflict have cast a shadow on the profits of Korean chip manufacturers such as Samsung Electronics. According to customs data, the revenue in the third quarter was 76 trillion won, up 2.7% year on year; The profit was 10.8 trillion won, down 31.7% year on year. This is the first time in the past three years that Samsung Electronics' profit has experienced negative year-on-year growth. The company said on the financial report conference call that it is expected that demand will not recover until at least the second half of 2023.

Semiconductor is the largest source of income for the Korean economy. As the weak currency expanded the trade deficit and global interest rates rose, which depressed consumer demand for the country's technology exports, the Korean economy slowed down last quarter.

According to the preliminary estimates released by the Bank of Korea, the Central Bank of Korea, South Korea's gross domestic product (GDP) grew 0.3% month on month in the third quarter of this year, up 3.1% year on year. According to customs data, the increase in investment in machinery and transport equipment boosted South Korea's equipment investment by 5% month on month in the third quarter; Thanks to the increase in consumption of durable goods such as passenger cars and catering and accommodation, personal consumption increased by 1.9% month on month; Government expenditure grew 0.2% month on month and construction investment grew 0.4% month on month. In addition, exports and imports increased by 1% and 5.8% month on month respectively.