South Korean exports, a data set often held up as a bellwether for the health of the global economy, fell off a cliff in January, pointing to a troubling slowdown in global trade.
Exports from the east Asian nation dropped 14.6% in the first 20 days of 2019 versus the same period last year, according to data released Monday morning. That compared to an increase of 1% over the same period in December.
According to the Korea Customs Service, the country's exports totalled $25.7 billion in the first 20 days of the year.
The drop was a shock to analysts, who had largely been expecting a contraction in exports, but a small one.
"We had expected a contraction, but the extent of the fall was a surprise," Freya Beamish, chief Asia economist at Pantheon Macroeconomics, wrote in an email Monday.
"Growth at the margins is getting very ugly - 20-day exports fell at an annualised rate of 38.6% in the three months to January, seasonally adjusted, much sharper than the 19.2% fall in the three months to December," Beamish wrote.
"The abysmal January report was partly about the impact of weaker oil prices on Korea's exports of petroleum products and petrochemicals. But worryingly, semiconductor exports tanked."
The data is usually released before the first trading session of the month in Asia, which makes it the first of the world's major economic indicators to be drop each month. While Monday's data is not for a complete month, it signals that when the full month's data is made public in early February, things won't look great.
Because South Korea's exports are heavily exposed to China and Japan - the world's second and third largest economies - it is consider to have strong predictive power. The data released Monday showed exports to China dropping by 22.5% in the first three weeks of the year, reflecting the continued slump in the Chinese economy.
The Chinese economy grew by 6.6% over a year earlier, down from 2017's 6.9%, official data suggested on Monday, marking the lowest annual increase in GDP since 1990, when the country was hit by international sanctions in the aftermath of the Tianamen Square Massacre.
In addition to being an early report, the South Korean export data is also considered a leading indicator for world trade, meaning it tends to augur what's happening in trade globally.
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