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Korea Trade Balance March 2022

Korea: Merchandise exports grow at a more moderate pace in March

Merchandise exports jumped 18.2% in annual terms in March (February: +20.7% year-on-year). Meanwhile, merchandise imports soared 27.9% in annual terms in March (February: +25.2% yoy).

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 0.1 billion shortfall in March (February 2022: USD 0.9 billion surplus; March 2021: USD 3.9 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 15.5 billion surplus in March, compared to the USD 19.6 billion surplus in February.

The statistical release commented that Korea’s presidential elections and the Russia-Ukraine war had hit export growth and noted the sharp increase in energy imports in the month amid rising global oil prices.

Meanwhile, on the outlook, Jeong Woo Park, economist at Nomura, commented:

“Does this change our view? No. March’s trade data confirmed that the trade deficit will likely remain a drag on GDP growth this year. We maintain our below-consensus 2022 GDP growth forecast of 2.0% yoy and believe the BOK will lower its growth forecast from 3.0% to around mid-2% at the May meeting, which would mark a material shift from its hawkish stance […] In coming months, the Fed’s faster normalization, the impact of the geopolitical conflict and lockdowns in China pose downside risks to export growth, as also reflected in the S&P Global manufacturing PMI survey. Therefore, we expect export growth to resume its downtrend into Q2, after posting solid growth in Q1.”

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