South Korea’s Component, Material Exports Dropped in H1, 2016

The Ministry of Trade, Industry & Energy announced on July 14 that South Korea’s component and material exports and imports for the first half of this year are estimated at US$121.8 billion and US$74.2 billion on a customs clearance basis, respectively. According to that data, the exports fell by 9.2%, the imports fell by 8.2% and the trade surplus in the sector fell by US$5.9 billion from a year ago, respectively.

The exports had reached US$109.4 billion in the first half of 2010 and rose to US$123.6 billion in Q1, 2012, US$129.9 billion in Q1, 2013, US$133.5 billion in Q1, 2014 and US$134.2 billion in Q1, 2015. The ratio of component and material exports to total exports of South Korea for Q1, 2016 is estimated at 50.4%, up 0.4 percentage points from a year ago and over 50% for the second consecutive year.

According to the ministry, the component and material exports to China dropped by 14.9% to US$39.7 billion, to Latin America by 23% to US$5.8 billion and to the Middle East by 19.4% to US$5.6 billion whereas the exports to Vietnam increased by 15.1% to US$9.8 billion. This can be attributed to the free trade agreement between South Korea and Vietnam and an increase in manufacturing investment in Vietnam. By item, the exports of electronic components and chemical products fell 15% and 8.3% to US$40 billion and US$18 billion but those of computers and office equipment posted an increase of 2.4% to US$2.7 billion.

The ratio of component and material imports to total imports, in the meantime, is estimated at 38.6%. The imports from China and Europe dropped 11.8% to US$20.8 billion and 15.3% to US$11.6 billion unlike those from Vietnam that jumped by 57% to US$2.1 billion.

In the first half of this year, South Korea recorded a trade deficit of US$6.6 billion in the industry with respect to Japan. The deficit decreased by 12.6% from a year earlier and South Korea’s dependence on materials and components imported from Japan totaled 17.1%. During the same period, the ratio of exports to China fell 2.2 percentage points to 32.6%. The ministry explained that this is because South Korea’s electronic component exports to China dropped by 19% to US$18.8 billion and its compound and chemical product exports to China declined by 12.6% to US$5.3 billion due to China’s sluggish exports and efforts to enhance self-sufficiency in the industry.

The ratio of exports to Vietnam, in contrast, showed a year-on-year growth of 1.7 percentage points during the period. Vietnam is currently the third-largest destination for South Korean component and material exporters.