(Updates with more details)
By Yoo Choonsik
SEOUL, Feb 2 (Reuters) - South Korean exports suffered their biggest-ever drop in January, adding to market expectations that the central bank will cut interest rates by at least half a percentage point to shore up Asia's fourth-largest economy.
The country is home to the leading producers of computer chips, mobile phones and ships and is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand.
Japan, China and a number of other export-reliant economies have also reported a collapse in trade in recent months, with the technology industry hit especially hard by worsening consumer demand in the United States and Europe.
The Ministry of Knowledge Economy data on Monday showed exports in January fell 32.8 percent over a year earlier, worse than analysts had expected, while imports sagged 32.1 percent as consumers cut spending amid a deepening global recession.
For a graphic of South Korean export growth, double-click: https://customers.reuters.com/d/graphics/KR_EXP0209.gif
The data reinforced investor expectations that South Korea's central bank will cut interest rates for the sixth time in four months at its Feb. 12 policy meeting to help boost domestic demand and cushion cooling demand from abroad.
"Exports will inevitably fall by double-digit rates throughout the first half as the global economy is unlikely to show a fast recovery," said Kim Jae-eun, an economist at Hana Daetoo Securities.
"With the export data and other recent indicators, the Bank of Korea is more likely to cut its key interest rate by 50 basis points, rather than 25."
The Bank of Korea has since early October more than halved its base rate to a record-low of 2.5 percent.
GOVERNMENT STEPS
The government of President Lee Myung-bak, whose popularity has plunged since taking office about a year ago on growing discontent over its handling of the economy, has offered around $100 billion worth of stimulus to lift domestic demand.
But there have been few signs yet that its efforts are reviving the economy, with central bank estimates showing late last month that gross domestic product shrank the second-most on record in the fourth quarter of 2008.
The Bank of Korea forecast in December this year's economic growth would reach an 11-year low of 2 percent, but many analysts predict South Korea's exports-dependent economy will almost certainly shrink, by as much as 3 percent.
Financial markets gave a muted reaction to the ministry's figures because they matched data that the country's customs agency posted on its website (http://www.customs.go.kr) on Sunday.
For the first 20 days of January, the most up-to-date available by country, exports to China fell 32.2 percent from a year earlier, those to the United States by 21.5 percent and those to European markets by 46.9 percent, the ministry said.
Economists surveyed by Reuters had forecast South Korea's exports would drop 28.1 percent in January from a year ago and imports to fall by 33.5 percent.
Exports totalled $21.69 billion in January while imports stood at $24.66, producing a trade deficit of $2.97 billion, compared with a revised $0.54 billion trade surplus in December 2008, the ministry said.
It said electronics, automobiles and petrochemical products led the export decline in January by posting annual declines of 40 percent or more for the first 20 days of the month.
An official at the ministry told reporters later it would stick with the goal of increasing exports by more than 6 percent for all of 2009 despite the shrinking demand for global trade, although he did not elaborate on how. (Additional reporting by Cheon Jong-woo; Editing by Jonathan Thatcher & Jan Dahinten)