Overseas sales fell 8.8 percent in July from a year earlier, the biggest contraction since September 2009, the government reported today. The median estimate in a Bloomberg News survey was for a 3.7 percent decline. Consumer prices rose 1.5 percent, less than all 16 estimates in a Bloomberg survey. The Kospi Index (KOSPI) snapped a four-day rally even as overseas funds bought more Korean equities than they sold for a fourth day.
Why is this important? According to Jim O’Neill, Chairman of Goldman Sachs Asset Management, South Korea’s trade data is amongst one of the most reliable economic indicators (source: GoldmanSachs) in the world because of its linkage between manufacturers in the East and customers in the West. Thus the decline in Korea’s exports are no surprise given, as we’ve stated constantly, that due to the austerity measures in Europe a decline in manufacturing and global growth isn’t a surprise.