Korea: Merchandise exports fall in October on fewer working days, although underlying momentum is robust
Merchandise exports edged down 3.6% on an annual basis in October, following September’s 7.6% upturn. However, the downtick came on fewer working days, as average daily exports actually rose. Looking at individual sectors, sales of health, home appliances and vehicle products rose, while exports of ships fell. Meanwhile, merchandise imports fell 5.8% over the same month last year in October (September: +1.6% yoy). As a result, the merchandise trade balance deteriorated, recording a USD 6.0 billion surplus in October (October 2019: USD 5.3 surplus; September 2020: USD 8.7 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 39.6 billion surplus in October, compared to the USD 38.8 billion surplus in September.
Looking ahead, the medium-term outlook remains positive, as exports should be supported by the Covid-19-driven acceleration of digitalization abroad, which is set to boost demand for Korean IT products. However, demand in the near-term could be dented to a degree by the reintroduction of lockdown measures in the EU.Jeong Woo Park, an economist at Nomura, said:“We expect Korea’s export growth to remain on its steady uptrend, as the global shift towards digitalisation, including more e-commerce, is likely to result in a structural increase in demand for tech products. Additionally, new products – such as electric vehicles, rechargeable batteries and biohealth – should also support exports.”