Double-digit Export Growth
In February, Korea exports fared well. Both the amount and the growth rate were the highest in five years since February 2012. It is noteworthy whether or not Korea's exports will turn positive since recording deficits for the second consecutive year (-8.0 percent YoY in 2015 and -5.9 percent YoY in 2016).
The Ministry of Commerce, Industry and Energy announced on March 1 that both exports and imports of Korea spiked in February based on estimated customs clearance data. In terms of trade balance, Korea posted a surplus of US$ 7.2 billion for five consecutive years.
Exports recorded double-digit growth for the second consecutive month following an 11.2-percent increase in January. In particular, since December 2011, exports rose for four consecutive months in five years and two months, cementing a recovery after putting an end to the long slump. Both total exports and increases in February were the highest in five years since February 2012. Exports were US$ 43.2 billion (about 48.8 trillion won), up 20.2 percent from the same period of last year. Unit prices of major export items such as semiconductors, steel, petrochemicals among others ballooned, playing a key role in the export increase.
Imports also jumped 23.3 percent year-on-year to US$ 36 billion. This is a double-digit growth rate for two consecutive months, the first since December 2011. The increase is the highest since February of 2012 (23.9 percent). This result is attributable to an increase in imports of semiconductor manufacturing equipment and crude oil imports.
Won-denominated exports directly linked to the profitability of Korean companies, grew 13.1 percent, double-digit growth in five years since February 2012, and continued to increase for four consecutive months in two years and one month since January 2015.
Korea’s average daily exports also expanded 9.3 percent to US$ 1.96 billion, rising for three months running in two years and three months since November 2014. Export volume and unit price growth sat at 1.8 percent and 18.1 percent, respectively.
By item, exports of 10 of 13 main items swelled. The ten items are petroleum products (72.3 percent), semiconductors (54.2 percent), steel (42.9 percent), petrochemicals (42.6 percent), flat panel displays (20.1 percent), computers (14.0 percent) and general machinery (10.1 percent), automobiles (9.6 percent), textiles (8.0 percent) and car parts (7.2 percent). But exports fell in home electronics (-14.5 percent), wireless communication equipment (-21.0 percent), and ships (-29.5)
In particular, semiconductor exports recorded a monthly high of US$ 6.4 billion. Demand for solid-state drives (SSD) rose, taking the lead in the biggest monthly semiconductor exports.
Petrochemical exports amounted to US $ 3.81 billion thanks to a hike in export prices and an increased production capacity due to the operation of newly added facilities. Petroleum products, steel, display panels (PDs), general machinery, automotive parts, and computers performed well. Automobiles made a turnaround to growth in two months as exports to emerging markets swelled.
Exports of the petrochemical sector which stagnated for a while on account of low oil prices rose for the fifth consecutive month. Export volume was the highest in two years and four months. Steel chalked up the largest export figure since December 2014 with US$ 2.96 billion thanks to the fact that export prices of steel products rose by more than 10 percentage points.
Exports of all five promising consumer goods such as cosmetics, pharmaceuticals, and agricultural and fishery products climbed. Cosmetics recorded 83.1 percent growth in exports for the second consecutive month due to a large increase in exports to China, its main market. Textiles, which recorded a drop in exports for two consecutive months, rebounded in three months thanks to stronger demand after Chinese New Year’s Day.
However, exports of wireless telecommunication devices continued to be negatively affected by the discontinuance of the Galaxy Note 7 and a delay in the launch of the Galaxy S8.
By region, exports to Vietnam, the ASEAN, China, Japan, the CIS, India and the European Union (EU) continued to rise and exports to the US and Latin America switched for an increase.
Korea’s exports to China which account for the largest portion of Korea's exports grew for the fourth consecutive month. They marked the highest growth (28.7 percent) since November 2010 in six years and three months since November 2010. Exports to emerging markets such as Vietnam (37.3 percent), ASEAN (31.2 percent), India (17.5 percent) and Latin America (19.5 percent) also soared.
The Ministry of Commerce, Industry and Energy forecast that exports will continue to recover in March as recently a recovery of exports strengthened and export structure innovation paid off gradually. However, downward risk remains due to the expansion of external uncertainties such as the spread of protectionism and foreign exchange volatility.