Korea: Merchandise exports rise at a faster pace in April
Merchandise exports shot up 41.1% on an annual basis in April, on the heels of March’s 16.5% jump, amid an expansion of all relevant product subgroups. Notably, auto exports—the second biggest export subgroup—rose three quarters in the month. April 2021’s outturn marked the highest value of exports ever for the month of April, and also marked the sturdiest expansion since January 2011. Meanwhile, merchandise imports jumped 33.9% in annual terms in April (March: +18.8% yoy), marking the strongest growth since June 2010, amid a recovering domestic market.
As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 0.4 billion surplus in April (March 2021: USD 4.1 billion surplus; April 2020: USD 1.7 billion deficit). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 48.6 billion surplus in April, compared to the USD 46.6 billion surplus in March.
Looking ahead, exports should be robust, benefiting from recoveries abroad, massive stimulus in major trading partners, and the ongoing surge in demand for IT products and electric vehicles.
On the outlook, Jeong Woo Park, economist at Nomura, commented:
“There is near-term uncertainty arising from the supply-side, which could negatively impact Korea’s exports. Our concern is that weather-related disasters, such as the drought in Taiwan, may constrain the anticipated upcycle in Korea’s export growth, as the chip shortage could cap the acceleration of the global industrial production cycle in Q2. A sustained chip shortage, which has thus far benefited Korea’s chip exports, is now prompting some manufacturers, such as auto factories in some countries including Korea, to halt production […]. Nevertheless, despite these near-term concerns, Korea’s export growth appears set to accelerate in a more broad-based manner amid the strong demand recovery.”