South Korea exports seen continuing slump in January

South Korea's exports are expected to extend their slump in January as the global economy shows little sign of improving sharply, while inflation is seen likely to have cooled this month as global oil prices fall further.

A Reuters poll on Wednesday showed the decline in shipments was expected to continue for a 13th straight month, with the 14 analysts polled picking a median fall of 10.8 percent on-year in January.

This would be slightly less severe than the 14.1 percent drop in December but still bad for the ongoing recovery if global demand remains soft while global commodity prices keep declining, analysts said.

"A double-digit percentage fall looks inevitable as there is one less working day in January from last year while falling oil prices will also drag down trade costs," said Stephen Lee, senior economist at Samsung Securities in Seoul.

The same poll forecast imports would drop by 15.1 percent on-year in January.

Inflation in January is expected to ease to 0.9 percent versus 1.3 percent in December as the effect from a cigarette price hike last year is set to dissipate while a recent cut on city gas prices will also reduce price pressures.

"This year inflation will be stabilised at a low level from falling global commodity prices and sluggish domestic demand and likely to come to 1.4 percent at year-end, per the central bank's forecast," said Lee Sang-jae, chief economist at Eugene Investment & Securities.

The Bank of Korea forecast inflation would stand at 1.4 percent this year and 2.0 percent in 2017.

The central bank's inflation target for 2016-2018 is 2 percent. It has said inflation will move upward this year, but the pace will be very slow and the target is unlikely to be achieved in 2016. Separately, the poll forecast December industrial output to have inched up 0.3 percent in monthly terms as the slump in global demand likely capped improvement in services and retail sales.

Factory output fell 2.1 percent in November, which had been the worst decline in 10 months.

The output data will be released on January 29, while trade and inflation data are due on Feb. 1 and 2, respectively.