SEOUL, Oct. 16 (Korea Bizwire) – South Korea’s exports are expected to continue to decline in the remainder of the year amid low oil prices and a slowing Chinese economy, a poll showed Friday.
The country’s leading export sentiment index came to 48.6 for the October-December period, down 3.3 points from the previous quarter, according to the Korea Trade-Investment Promotion Agency (KOTRA).
A reading above 50 means optimists outnumber pessimists, while a reading below 50 means the opposite.
The Q4 reading marks only the second time the index dipped below the benchmark 50 since the state-run trade agency began conducting the quarterly poll six years ago. The first time was in the second quarter when the index came to 48.5 points.
The latest index is largely based on a survey of 2,178 foreign buyers and trading firm officials stationed overseas, but it also considers economic conditions of major import countries and relative price competitiveness of South Korean products.
“The economic conditions index especially showed large decline trends in CIS, Central and South American countries, and China that are concerned about a possible U.S. rate hike,” KOTRA said in a press release.
A U.S. rate hike, the first of its kind in nearly a decade, is feared to prompt a massive outflow of foreign capital from most emerging economies, including China.
Such fears have caused jitters in the Chinese market, which had already been slowing. This in turn has apparently led to significant cuts in South Korean exports, which have dipped every single month since the beginning of the year.
China by far is the world’s single-largest importer of South Korean goods, accounting for over one-fourth of South Korea’s total exports in 2014.
The KOTRA poll showed the dwindling price competitiveness of locally produced products may further hurt exports, with an index showing the exporters’ sentiment toward price competitiveness of their goods coming to 46.6.
By industrial sector, both the petrochemical and petroleum sectors offered a gloomy outlook, registering an index of 45.8 and 47.4 points, respectively, for the fourth quarter.
Large drops in global oil prices have been blamed as another major reason for the country’s shrinking exports as they pulled down export prices of petrochemical and petroleum products, which together account for nearly 25 percent of the country’s overall exports.
The trade ministry earlier said the average price of Dubai crude more than halved to US$45.8 per barrel in September from $96.6 per barrel the same month last year. The average price of South Korea’s petroleum and petrochemical products plunged 46.1 percent and 26.7 percent on-year, respectively, over the cited period.