Korea: Merchandise exports grow at a quicker pace in March
Merchandise exports jumped 16.6% on an annual basis in March (February: +9.5% year-on-year). March’s result marked the most robust growth since October 2018, as sales surged for commodities such as petrochemicals and steel, as well as for more high-tech products such as chips and rechargeable batteries. That said, daily average export growth decelerated in March following an extremely strong February. Meanwhile, merchandise imports shot up 18.8% over the same month last year in March (February: +14.1% yoy), amid higher prices for key commodities such as oil. The print marked the strongest imports growth since October 2018.
As a result, the merchandise trade balance improved from the previous month, recording a USD 4.2 billion surplus in March (February 2021: USD 2.6 billion surplus; March 2020: USD 4.4 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 46.7 billion surplus in March, compared to the USD 46.9 billion surplus in February.
Going forward, exports should continue benefiting from a broad-based expansion in foreign sales, due to a red-hot chip market and U.S. stimulus. However, some short-term risks arise for key sectors that depend on semiconductors such as autos and IT products, due to possible supply shortages.On this, Jeong Woo Park, Korea economist at Nomura commented:
“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, which may result in further delay in goods production of other manufactured products such as mobile phones and consumer electronics (Note that auto and auto parts exports comprise ~10% of Korea’s total exports). 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.”