By Cynthia Kim

SEOUL (Reuters) – South Korea’s exports grew at the slowest pace in nearly two years in September as softening global demand piles pressure on the trade-dependent economy.

Overseas shipment grew 2.8% in September, missing the 2.9% tipped in a Reuters poll of analysts and the slowest expansion since October 2020.

Asia’s fourth-largest economy has seen export growth decline to the single digits since June as slowdowns in the United States, Europe and China put the brakes on demand for Korean goods.

Shipment data out of Korea provides an early health check on global trade as its manufacturers of chips to cars import massive amounts of raw materials and components and straddle a wide swathe of the world supply chain.

With growing fears of a global recession, Asia’s exports are expected to weaken further in coming months.

“Korean exports will suffer further from weaker external demand and base effects, and relatively stronger import growth will widen the trade deficit further,” said Yu-mi Kim, an analyst at Kiwoom Securities.

Imports jumped 18.6%, faring better than 16.4% expansion expected in the survey but slowing from a 28.2% gain in August.

That brought the trade balance to a $3.77 billion deficit, marking a sixth consecutive month in red.

Exports of semiconductors declined 5.7% in September from a year earlier, while steel exports dropped 21.1%. Auto exports, however, were up 34.7%.

By destination, shipments to the United States gained 16.0%, but those to China and the European Union were down 6.5%, and 0.7%, respectively.