Rebounding?
It has been found that the total exports from South Korea rebounded in 20 months last month. Nevertheless, negative variables still remain in the form of the probability of an interest rate hike in the United States, receivership of Hanjin Shipping, strike on the part of Hyundai Motor Company, etc.
The Ministry of Trade, Industry & Energy announced on September 1 that South Korea’s total exports for August this year reached US$40.1 billion, up 2.6% from a year ago. It added that the country’s imports for the same period totaled US$34.8 billion, increasing year on year for the first time in 23 months, and the monthly trade surplus added up to US$5.3 billion with the country recording a trade surplus for the 55th consecutive month.
Last month, its export volume decreased by 3.3%, 1.7 percentage points more than in the preceding month, but the unit export price rebounded in 22 months to show an increase of 6.1%. In addition, August 2016 had two more business days than the same month of last year and this led to an increase of US$3.5 billion to US$4 billion given that the average daily export was US$1.7 billion to US$1.8 billion.
The exports of the 13 major items that account for 80% of South Korea’s total exports showed a noticeable improvement, too. 12 out of the 13 had shown a negative growth in July, but the number decreased to five last month. For example, semiconductor exports, which take up 12% of the total exports, increased by 2.5% to record a positive growth in 11 months. Steel exports, which represent 6% of the total, increased 5.4% while ship exports soared by 89.9%. Likewise, petrochemical, auto parts, textile, general machinery and computer exports rose 4.1%, 3.2%, 2.3%, 1.5% and 23.4%, respectively.
Cosmetics exports rose 79.9% while medicine, SSD and household and infant item exports increased by 46.3%, 37.3% and 14.7%. In contrast, automobile exports dropped by 14.8% due to the factors including the strike in Hyundai Motor Company, which resulted in a loss of US$920 million equivalent to 65,700 vehicles. The ministry explained that the export growth rate would have reached 5% or so without the strike.
The ministry added, though, that the increase recorded last month is unlikely to be the beginning of an upward trend in that South Korea’s exports to China and the United States, the two largest export destinations, fell 5.3% and 4.8% last month. Besides, the Fed is likely to raise rates within this year and the Chinese economy is likely to slow down in the event of a slowdown of the European economy. Then, South Korea cannot but be affected with 25% of its total exports going to China. Petroleum and petrochemical product exports, which account for 18% of the total, can fall again in a case where the international oil price falls or fails to rebound to at least US$50 per barrel before the end of this year.