South Korea’s total international merchandise trade activity dropped 14.7% year over year in October, Panjiva’s analysis of official data shows. That included a 14.7% drop in exports, which was the 11th straight month of declines and the fastest drop since Jan. 2016.

The underlying picture excluding the volatile shipping industry was even worse with a 15.8% drop excluding the industry. The shipping sector may continue to be a bright spot / mask weaker underlying exports from other sectors as enjoys a recovery as outlined in Panjiva’s research of Oct. 30.

Despite the continued downturn, the government is optimistic that a recovery in exports will start in November, Yonhap reports, in part due to a return to growth in the semiconductor industry.

Chart segments change in South Korea’s international merchandise trade by direction. Calculations based on MOTIE data.  Source: Panjiva

While semiconductor exports from China, Japan and Taiwan started to recover in September there was still a firm downturn in exports from South Korea with a 32.1% year over year slump in October. That followed a 30.2% slide in 3Q. 

The downturn in the semiconductor industry’s exports accounted for 46.0% of October’s drop in exports in dollar terms. It’s therefore difficult to see national exports recovering without a marked turnaround in semiconductors.

There are some signs of hope from technology products with exports of telecoms network gear and computers recovering by 8.3% and 7.7% respectively after a downturn in 3Q. Commodity exports remain weak though, with petrochemical and refined oil exports down 12.1% and 26.3% respectively alongside steel which fell 12.1%.

Chart segments change in South Korea’s exports by sector. Bubble size indicates total exports in the past 12 months. Calculations based on MOTIE data.  Source: Panjiva

The weaker South Korean data also bodes ill for the rest of Asia, and in particular Japan where there have been some signs of improving political relations. The improved relations are particularly necessary given South Korean imports from Japan slumped 23.4% lower in October compared to an 8.4% drop in 3Q. Similarly South Korea’s exports to Japan fell by 13.7% in October compared to 4.1% in 3Q.

Chart segments change in South Korea’s trade with Japan by direction. Calculations based on MOTIE data.  Source: Panjiva

In dollar terms, Japan’s total exports only fell by 0.7% year over year in September. HOwever, Panjiva’s analysis of S&P Global Market Intelligence indicates that 9 of 12 Asian countries saw lower exports in September with the average decline for the 12 reaching 2.5% year over year. The pattern is similar globally with 15 out of 21 countries down and the 21 in total reporting a weighted average 2.5% slide compared to 2.7% in the three months to Aug. 31.

Chart shows change in exports by origin. Calculations based on S&P Global Market Intelligence data.  Source: Panjiva