Korea: Merchandise exports accelerate in May
June 2, 2022
Merchandise exports jumped 21.3% year-on-year in May, on the heels of April’s 12.9% jump. May’s result marked the strongest outturn since November 2021. Meanwhile, merchandise imports soared 32.0% in annual terms in May (April: +18.6% yoy).
As a result, the merchandise trade balance improved from the previous month, recording a USD 1.7 billion shortfall in May (April 2022: USD 2.5 billion deficit; May 2021: USD 2.8 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 8.5 billion surplus in May, compared to the USD 13.0 billion surplus in April.
Annual export growth in May was inflated by the fact that there were two more working days this May than in May last year. Average daily export growth—a gauge which isn’t affected by the number of working days in the month—was lower in May than it was in April. That said, the print was still better than the market had expected. The external sector was faced with several headwinds in the month, including rising inflation and interest rates, as well as the disruption to supply chains caused by lockdowns in China.
Analysts at Nomura commented on the outlook:
“Interestingly, export data in Q2 (April–May) show a likely return to the pre-pandemic growth style, in which subdued domestic demand (falling investment growth and weak consumption) leads to an increased contribution from net exports, due to lower import growth. Indeed, despite (nominal) trade deficits, net exports in real terms (volume) have improved.”
Author: Matt Cunningham, Economist