South Korea’s nominal trade likely contracted in January

South Korea's exports and imports are expected to further fall in January in terms of dollar-denominated flows. Exports are likely to decline to $38.0bn from $42.5bn, whereas imports are expected to fall to $32.0bn from $35.5bn. The persistent fall in oil prices is likely the main reason for the considerable contraction in nominal trade, whereas seasonal effects are expected to have partially caused the contraction.

Additionally, the weakness in electronics sector in December is expected to have continued to January. South Korea's trade surplus is forecast to have declined slightly, in spite of lower oil prices, which also indicates weakness in exports. As long as oil prices keep on falling, the nominal trade will contract.