Despite Unfavorable Conditions
Exports are propping up the South Korean economy. which is showing unmistakable signs of slowing down, such as a decrease in total industrial production and investment. Korea’s outbound shipments increased 6.2 percent on-year in July, marking the second-largest monthly figure of all time. The export growth is notable as it was achieved amid aggravating external conditions, including a trade war between the United States and China, a higher volatility in exchange rates and an economic contraction of emerging countries.
According to a report on the July exports and imports trend released by the Ministry of Trade, Industry and Energy (MOTIE) on August 1, South Korea’s exports in July reached US$51.88 billion (58.11 trillion won) on the customs clearance basis, up 6.2 percent from a year ago. The nation’s imports surged 16.2 percent to US$44.88 billion (50.27 trillion won).
Korea’s cumulative exports in the first seven months of the year rose 6.4 percent to US$349.1 billion (390.99 trillion won), reaching an all-time high. Korea’s exports decreased 0.17 percent in June compared to a year earlier, but rebounded in just one month despite a high base effect due to large-scale ship exports of US$6.09 billion (6.82 trillion won) during the same month last year. It is the first time that Korea's monthly exports topped the US$50 billion (56 trillion won) mark for five straight months. The export figure in July was the second-largest for a month after September 2017’s record of US$55.12 billion (61.73 trillion won). The average daily exports of US$2.16 billion (2.42 trillion won) were also the highest ever for July. South Korea recorded a trade surplus of US$7.01 billion (7.85 trillion won) in July, extending the monthly surplus streak to 78 months.
The MOTIE said that the nation’s exports grew due to a global manufacturing market recovery, a growth in gross domestic product (GDP) in major countries and an increase in unit costs of main export goods.
“As the unit price of main products is rising, including a 20 percent increase in petrochemical products and a 45.1 percent jump in petroleum products, South Korea’s exports will continue to show a strong growth in the future,” the ministry said.
Exports increased for 10 out of the 13 main items – petroleum products by 45.2 percent, steel 34 percent, semiconductors 31.6 percent, petrochemical products 24.1 percent, general machinery 18.5 percent, computers 10 percent, auto parts 7.2 percent, textiles 6.6 percent, wireless communication devices 4 percent and displays 2.4 percent.
The shipments of semiconductors surpassed US$10 billion (11.2 trillion won) for three consecutive months from May, marking the fourth-biggest figure in history. However, the export growth rate is on the decline from 44.4 percent in May, 39 percent in June and 31.6 percent in July.
The overseas sales of petrochemical products exceeded US$4 billion (4.48 trillion won) for eight months in a row for the first time, driven by rising oil prices and product prices and normal operation of new facilities. The exports of general machinery also surpassed US$4 billion (4.48 trillion won) for the fifth straight month for the first time. In addition, the outbound shipments of petroleum products, mainly diesel and aviation gasoline, exceeded US$3 billion (3.36 trillion won) for none consecutive month. The steel sales in overseas markets showed a growth for the first time in four months with 34 percent in spite of stricter regulations on imports.
In contrast, the exports of three goods decreased – vehicles by 13.5 percent, home appliances 15.9 percent and vessels 73.4 percent. The outbound shipments of cars showed a decline for six months in a row from February due to sluggish sales in the US, the largest market in the world, but the figures are likely to rebound in the second half of the year, according to the MOTIE.
The exports to eight regions, including the US, EU and Vietnam, rose, while those to five regions – China, Japan, Central and South America, Middle East and the Commonwealth of Independent States (CIS) logged a double-digit growth. The shipments to China, South Korea’s biggest trading partner, surged 27.3 percent in July, marking 21 months of consecutive gain despite the trade conflict between the US and China.