South Korean exports in February tumbled in their 14th consecutive month of declines, with the longest slump in the country's modern history underscoring how a slowdown in China is putting trade-reliant economies on the skids.
The bleak overseas sales from the world's sixth-largest exporter, home to globe-trotting manufacturers of mobile phones to cars to ships, suggest policy makers will have their work cut as they seek to spark growth in the face of faltering demand.
Lower oil prices also hurt South Korean exports in February, which dropped 12.2 percent from a year earlier to $36.42 billion, while imports slumped 14.6 percent to $29.02 billion, producing a $7.39 billion trade surplus.
February's exports marked the longest period of consecutive annual declines on record and brought the country's monthly exports in U.S. dollar value down by 30 percent from a record high of $51.6 billion set in early 2014, official data shows.
The persistent weakness in exports robs the economy of a key engine of growth and is likely to add pressure on the country's central bank to cut the policy interest rate further after two reductions last year.
"We expect manufacturing to be a drag on Korea's growth again in 2016," Tim Condon, economist at ING in Singapore, said in a note to clients. "We also think growth worries will prompt the Bank of Korea to cut (the policy interest rate) by 25 bp to 1.25 percent in the second quarter."
Exports to China, South Korea's largest market with one-quarter of total shipments, shrank 12.9 percent in February from a year earlier, overshadowing modest gains in sales both to the United States and the European Union
The prospects remain gloomy as an official survey index from China showed on Tuesday the manufacturing activity in the world's second-largest economy shrank more than expected during February.
South Korea's February export decline was less than a revised 18.8 percent drop in January but this was likely due to there being one more working day in February this year than last year.
Official data released over the past week showed consumer sentiment slid to an eight-month low and confidence among manufacturing firms at its gloomiest since the 2008/2009 global financial crisis.
Ominously, a stuttering global economy holds little hope for the many struggling businesses.
"It's meaningless to talk about the timing for exports hitting the bottom as oil prices and global demand both show no sign of turning around," said Park Sang-hyun, chief economist at HI Investment & Securities.
(By Christine Kim and Choonsik Yoo; Editing by Shri Navaratnam)