South Korea's Export Growth Slows in September, Market Expectations for Monetary Policy Easing Rise
In September, South Korea's export growth slowed down, with shipments to the United States barely increasing, potentially paving the way for a monetary policy easing as early as next week. According to the customs service agency, exports grew by 7.5% from a year ago, a deceleration from the previous month's 11.2% rise. Despite beating analysts' consensus estimate of 6.5%, the slower growth was driven by a mere 1% increase in shipments to the United States, compared to an 11% increase in August.
Market expectations are now leaning towards the possibility of the Bank of Korea cutting policy interest rates from 3.50% at the upcoming rate-setting meeting next Friday. This move comes as concerns about economic growth overshadow inflation worries. On the other hand, imports only climbed by 2.2%, falling short of the 3.0% rise forecasted by analysts.
The preliminary trade surplus widened to $6.66 billion in September from $3.77 billion in the previous month. It is worth noting that there were fewer working days in September due to a longer break for the Chuseok thanksgiving holiday.
In conclusion, the slower export growth and widening trade surplus in South Korea may signal a need for monetary policy easing to stimulate economic growth. Investors and market participants should keep a close eye on the upcoming rate-setting meeting by the Bank of Korea, as it could have significant implications for the country's economy and financial markets.
