Lee Sung-kwon, the chief economist at Goodmorning Shinhan Securities, said there was more bad news ahead but predicted a turnaround later this year.

"The global economic situation is still very difficult. We forecast a continued decline in exports into the third quarter, with a positive turnaround possible from the fourth quarter," he told the Reuters news agency.

Manufacturing slows

But in an indication that the global downturn would persist for a while yet, imports in the first two months of this year fell 31.4 per cent, led by raw materials and machinery, as manufacturers cut production in anticipation of further weak global demand for their goods.

Other government data on Monday showed that the country's industrial output fell at the sharpest rate on record in January.

The National Statistical Office said production in mining and manufacturing shrank 25.6 per cent in January from a year earlier, compared with a revised 18.7 per cent year-on-year drop in December.

The January contraction is the biggest since such data began being compiled in January 1970.
 
But a relatively slower decline in imports of consumer goods than in goods for manufacturing purposes indicated that the government's stimulus packages were making some impact.

The government hopes the stimulus packages will cushion the impact from the global recession and keep its economy from contracting more than two per cent.

Analysts have predicted gross domestic product will shrink by as much as seven per cent.

South Korea is the first of the big Asian exporting economies to report its trade data every month, providing an early indication of the state of global demand.