South Korea's trade sector likely to have worsened in September

Exports projected to have dropped 6.7%.

South Korea is scheduled to release September trade data tomorrow October, and Standard Chartered (SC) believes that exports likely dropped 6.7% y/y due to fewer working days in the month versus last year and a backlog due to the court receivership.

Court receivership is a form of bankruptcy where the firm cedes control to a group designated by the court of a major shipping company.

"We estimate that exports dropped in the first 20 days of September by 17% y/y, but increased 2.9% (factoring in fewer working days due to the long Chuseok holidays)," said SC.

The research firm added that the negative impact of the court receivership is limited over the first 20 days, but this problem will likely impact export growth through September.

"We expect September imports to drop 5.7% – much less than the 12-month average decline of 14.1% – as the oil price difference narrows. We believe the trade surplus remains strong in September, at USD 7.9bn," it said.