South Korean exports in September unexpectedly suffered their first annual drop in more than five years on long holidays, data showed on Monday, amid lingering concern about increasingly uncertain global economic conditions.
Exports in September fell 0.4% from a year earlier and imports also slid 2.1%, the Commerce Ministry data showed, hit by the three-day Thanksgiving holidays which fall in September or October every year.
The ministry said in a statement exports per work day actually hit a record value in September. Economists also said exports by Asia's fourth-largest economy would maintain robust growth thanks to still healthy demand from non-U.S. markets.
"The impact of a slow U.S. economy will not be as big as has been expected," said Jun Min-kyoo, an analyst at Korea Investment & Securities. "South Korean exports are expected to sustain around 10% growth until next year."
A senior ministry official told reporters exports in October would probably rebound to post annual growth of more than 10% and that the country would be able to achieve a $15 billion trade surplus target set for the whole of 2007.
South Korea sends more than one-fifth of its exports to China, where most of the goods are reprocessed for sales in other markets. Direct exports to the United States account for less than 15% of South Korea's total shipments abroad.
It is the first annual drop in South Korean exports since a 0.3% fall in June 2002 and the biggest annual loss since a 6.2% decline in March 2002, ministry figures showed.
A Reuters poll had forecast exports would rise 7.1% from a year earlier and imports by 7.4%.
But financial markets shrugged off the holiday-distorted figures, with the stock market gaining more than 1% and December treasury bond futures falling 11 ticks.
Exports at $29.55 billion and imports at $27.06 billion generated a trade surplus of $2.49 billion in September, compared with a $1.42 billion surplus in August.
South Korea is the first major economy in the region to report trade figures each month. All the September figures are provisional and revised two weeks later.
Investors and companies in South Korea have so far played down the immediate impact the slowing U.S. housing market and turbulent credit markets in major economies will have on the domestic economy.
The country's central bank said early on Monday its survey index measuring the sentiment among manufacturing companies fell slightly in October but clung on just under a 17-month high recorded in September, despite the U.S. subprime mortgage crisis.
Its business survey index for manufacturers fell to 94 for October from 95 in September.
The Bank of Korea also said on Sunday that South Korean exports would maintain growth provided the U.S. housing market's troubles do not significantly hurt global economic growth.
But aside of the uncertain U.S. economy, the strengthening won has now reemerged as a threat to South Korean exporters and prompted the central bank to issue a warning that it would keep close watch on the market.
The won was up 0.1% against the U.S. dollar in the Asian session morning session Monday, just about to score a decade high. It would mark the strongest since late 1997 if it rises above 912.6.