March 27, 2019 / 6:00 AM / 4 months ago

POLL-S.Korea March exports to shrink for 4th month on chip sector, China demand woes

* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=KREXP%3DECI poll data

* March exports seen -8.7 pct y/y, imports -4.9 pct y/y

* March CPI seen +0.9 pct y/y

* Feb industrial output seen -0.9 pct m/m

* March trade data due on Monday, April 1 at 0000 GMT

By Joori Roh and Cynthia Kim

SEOUL, March 27 (Reuters) - South Korean exports are expected to have contracted for the fourth straight month in March, hit by the deteriorating outlook for the chip business and faltering demand from major market China, a Reuters poll showed on Wednesday.

Exports were seen shrinking 8.7 percent from the same period a year earlier, extending a downturn seen since December, according to a median estimate of 11 economists. Exports shrank 11.4 percent in February, the steepest drop in nearly three years.

Imports this month are forecast to have contracted a median 4.9 percent from a year earlier, following a sharp 12.6 percent slide a month earlier, the survey showed.

Most economists said falling prices of memory chips as well as cooling Chinese demand for South Korean petroleum and IT products hurt shipments.

“Semiconductor exports are likely to have contracted around 30 percent from a year earlier due to steeper price falls for both DRAM and NAND,” said Lee Seung-hoon, chief economist at Meritz Securities.

Chip giant Samsung Electronics Co Ltd said on Tuesday its first-quarter profit would likely miss market expectations due to chip price declines and slowing demand for display panels, in an unprecedented statement ahead of its earnings guidance.

“South Korea’s China-bound exports are to post negative growth on slowdown in China’s manufacturing industry and the trade war,” said Chun Kyu-yeon, economist at Hana Financial Investment.

China’s factory activity contracted for a third straight month in February, offering further evidence the world’s second biggest economy is losing momentum. Analysts expect the U.S.-Sino trade war will continue to weigh on Chinese exports as a deal between the two economic powers look uncertain.

South Korea, the world’s sixth-largest exporter, also has been squeezed by the falling price of petroleum products, its other key export.

For the first 20 days in March, South Korea’s overseas sales fell 4.9 percent from a year earlier. By destination, exports to China tumbled 12.6 percent.

On the price front, analysts forecast the March headline inflation rate would improve to 0.9 percent on-year versus 0.5 percent in February, yet remaining far below the central bank’s 2-percent target.

February industrial output is expected to have snapped a 0.5 percent gain in January with a 0.9 percent decline, according to the survey.

February industrial output data will be released at 2300 GMT on Friday. Trade data are scheduled to be published at 0000 GMT on Monday, while the inflation figures are expected at 2300 GMT on April 1. (Reporting by Joori Roh and Cynthia Kim Editing by Shri Navaratnam)

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