SoKor Drifts Toward Recession As January 2023 Exports Plunge

South Korea's economy inched toward its first recession in three years as data showed its January trade deficit soared to a record thanks to a plunge in exports caused by a combination of long holidays and cooling global demand, Jihoon Lee and Choonsik Yoo reported for Reuters.

Photo Insert: The country's exports fell 16.6% in January from a year earlier, trade ministry data showed, worse than an 11.3% decline predicted in a Reuters survey and the fastest drop in exports since May 2020.

Asia's fourth-largest economy, which relies heavily on trade for growth, shrank by 0.4% in the October-December quarter and is now on the brink of falling into what would be its first recession since the middle of 2020 during the height of the COVID-19 pandemic.

Exports fell 16.6% in January from a year earlier, trade ministry data showed, worse than an 11.3% decline predicted in a Reuters survey and the fastest drop in exports since May 2020.

Imports fell 2.6% compared with a year earlier, less than a 3.6% drop predicted in the survey. As a result, the country posted a monthly trade deficit of $12.69 billion, setting a record amount for any month.

"I have a zero percent forecast for the first-quarter growth but today's trade figures are definitely a minus to that," said Park Sang-hyun, economist at HI Investment and Securities.

The increasing chances of recession - two consecutive quarters of decline in gross domestic product - also underscore growing bets in markets that the central bank's campaign of raising interest rates since late 2021 has run its course.

Leading the sluggish trade performance in January were a 44.5% dive in semiconductor exports and a whopping 31.4% plunge in sales to China, the trade ministry data showed.

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