(Bloomberg) -- A cooling technology cycle will hurt economic growth in Asia through weaker exports and capital investment, with South Korea taking the biggest hit, economists at Goldman Sachs (NYSE:GS) wrote in a note.
Chip exports from the region were up 16.6 percent year on year in 2018 to the end of November, accounting for just over a third of headline export growth.
While Goldman’s analysts expect the technology downturn to be benign, with modest price declines, they also see a risk that it could be worse than expected because of consumers delaying purchases once prices start to fall.
The most vulnerable would be South Korea, where chip exports accounted for 92 percent of headline export growth. Malaysia and Taiwan would be next hardest hit.
Goldman expects Korea’s semiconductor exports to weaken to falls of 7 percent year-on-year in the second half of 2019, the weakest since the global financial crisis. Together with other global headwinds that would lower the country’s current account surplus by $10 billion to about $60 billion, or 3.7 percent of GDP, its lowest in 7 years, it added.
Recent weak export data for South Korea suggests the slowdown could be more rapid than expected, Goldman said.