By Jihoon Lee

SEOUL (Reuters) – South Korea's export growth slowed to a seven-month low in October, missing market expectations, indicating that cooling global demand and U.S. election uncertainty are undermining an already shaky economic recovery.

Outbound shipments from Asia's fourth-largest economy rose 4.6% from a year earlier to $57.52 billion, compared with gains of 7.5% the month before, and has slowed for the third month, according to official data released on Friday. A Reuters poll of economists had anticipated a 6.9% increase.

Although exports grew for the 13th straight month in annual terms, it was the smallest increase since March.

On average per working day, exports were down 0.2%, marking their first decline since September 2023.

The trade data aligns with a survey showing South Korea's factory activity shrank for a second month in October, with output falling by the most in 16 months.

The trade-reliant economy barely grew in the third quarter despite some signs of recovery in consumer spending, as weakening exports raised the likelihood of more stimulus to support growth.

"Exports are slowing down," said Stephen Lee, chief economist at Meritz Securities.

"We had expected some support from industrial materials amid lower interest rates and a recovery in the global manufacturing sector, but it appears the recovery is delayed due to heightened uncertainty over the U.S. election and the global economic cycle itself," Lee mentioned.

Trade Minister Ahn Duk-geun said the government "is thoroughly assessing the potential impact" of next week's U.S. election on each sector, considering all possible scenarios.

Shipments to the United States rose for the 15th straight month at the same pace of 3.4% as the previous month, which was the slowest since August 2023.

Exports to China jumped 10.9% to a 25-month high of $12.2 billion, which is faster than the 6.3% increase the month before, while exports to the European Union rose 5.7%.

Exports of semiconductors were up 40.3% to $12.5 billion in October, although this was lower than the all-time high of $13.6 billion in September. Car sales increased by 5.5%, while exports of petroleum products dropped 34.9% due to a decline in oil prices over the year.

Imports rose 1.7% to $54.35 billion in October, after a 2.2% gain in September, which was also weaker than the 2.0% rise economists had expected.

The country posted a monthly trade surplus of $3.17 billion, less than half the previous month's surplus of $6.66 billion.