Korea: Merchandise exports rise at a more moderate pace in September
Merchandise exports jumped 16.7% on an annual basis in September, following August’s 34.8% upturn. September’s reading marked the weakest growth since March. That said, the deceleration was mainly due to a less favorable base effect, as August last year registered relatively high exports. Moreover, fewer working days owing to the Chuseok holiday were another factor for the slowdown. Meanwhile, merchandise imports rose 31.0% in annual terms in September (August: +44.0% yoy). Looking into the details, ship sales collapsed, weighing on the print, while automobile products also slumped as supply disruptions meant Hyundai Motors had to halt production for some days. However, petroleum products and computer parts were among the groups gathering momentum.
As a result, the merchandise trade balance improved from the previous month, recording a USD 4.2 billion surplus in September (August 2021: USD 1.6 billion surplus; September 2020: USD 8.4 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 43.7 billion surplus in September, compared to the USD 48.0 billion surplus in August.
Commenting on the outlook for trade, Jeong Woo Park, economist at Nomura, said:
“Admittedly, the continued disruptions to global supply chains, and growing downside risks to China’s economy are a potential threat to Korea’s exports over the medium term, but in the near term, we expect the prevailing risks to have a limited impact, as these risks are also likely to keep chip and commodity prices elevated, which benefits Korea’s intermediate product exports. For instance, between January-September 2021, chip exports fell by 8.8% yoy in volume terms, but rose by 27.0% in value terms. Note that intermediate exports account for 70% of total exports, and close to 80% of exports to China. Thus, the rising risks to the global economy may have a limited impact on Korea’s exports, which stands in stark contrast to previous cycles, in our view.”