‘Trade disputes may deal further blow to economy’

Korea could suffer a further setback if trade tensions between the United States and China, as well as another trade row with Japan, further drag on the global economy, a senior Standard & Poor’s official has said.

Korea, a small open economy, depends heavily on exports and foreign capital investment, a situation that makes it vulnerable to external shocks.

South Korea’s exports fell 11.7 percent year-on-year to $44.7 billion in September, extending their on-year decline to a 10th consecutive month due to weak prices of semiconductors and the yearlong trade row between the U.S. and China.

By country, Korea’s exports to China, its biggest trading partner, fell 21.8 percent year-on-year, and those to the U.S. fell 2.2 percent over the cited period, according to data from the trade ministry.

About 40 percent of South Korea’s exports go to the United States and China — South Korea’s top two trading partners and the world’s two largest economies.

“Any further deterioration in anything export-related — so either the Japan-Korea or U.S.-China relationship — dragging on the global economy, global trade may impact Korea further,” Elena Okorochenko, managing director and head of Asia Pacific at S&P Global Ratings, said in a recent interview with Yonhap News Agency.

Adding to these woes, Tokyo has been imposing tighter regulations on exports to Seoul of three materials that are critical for the production of semiconductors and flexible displays.