SEOUL • South Korea’s exports expanded at a slower pace than expected in October, affected by a national holiday that lasted more than a week. Inflation weakened slightly but remained near the central bank’s 2% target.
Exports jumped 7.1% in October from a year ago, after a double-digit expansion in every previous month this year. The median estimate of economists was for a 15.6% increase.
Imports gained 7.4%, leaving a trade surplus of US$7.3 billion (RM30.88 billion). Consumer prices rose 1.8% in October from a year earlier, compared to the median estimate for 1.9% gain. From the previous month, prices fell 0.2%, versus a median estimate of no change. Core inflation rose 1.3% in October from a year earlier.
The data may prompt a rethink among some economists after the fastest growth since 2010 strengthened the view that the central bank would raise the benchmark interest rate as soon as Nov 30.
While a sustained export recovery is supporting growth, even a small slowdown in core inflation may prompt caution at the Bank of Korea about a rate hike. Governor Lee Ju-yeol told lawmakers on Tuesday that the central bank needs to check price movements, including core inflation, before raising rates.
“Export growth in October wasn’t bad considering fewer working days, and it indicates domestic demand will recover as exports remain strong,” said Lee Sang-jae, an economist for Eugene Investment & Securities in Seoul.