S.Korea shows smaller trade surplus in September

South Korea's interim data released on 20th October points to weak exports and strong imports, which is reflected in our forecasts. The country's exports are expected to decline from $43.5bn in September to $43.0bn in October, which would be rather significant slowdown considering the Chuseok holidays in September, states Societe Generale.

Imports are likely to pick up from $34.6bn in September to $39.0bn in October, which can be interpreted as a technical rebound after the weakness in August and September. The trade surplus will likely show a steep decline as a natural outcome of weak exports and strongimports. 

An additional slowdown in exports would be bad for the Q4 growth outlook, but an increase in imports can be considered as evidence of a domestic demand recovery. At this juncture, it is believed that the trade data should be taken with a grain of salt, says Societe Generale.