Korea: Merchandise exports increase at a softer pace in January
February 1, 2021
Merchandise exports jumped 11.4% over the same month last year in January, following December’s 12.6% jump, amid solid increases in electric vehicle and tech sales, and surging demand from China, the U.S and the EU. Meanwhile, merchandise imports rose 3.1% over the same month last year in January (December: +2.2% yoy), marking the fastest pace since November 2018. It should be noted that both export and import growth partly stemmed from a favorable base effect.
As a result, the merchandise trade balance deteriorated from the previous month, but was significantly larger than in the same period last year, recording a USD 4.0 billion surplus in January (December 2020: USD 6.8 billion surplus; January 2020: USD 0.4 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 49.5 billion surplus in January, compared to the USD 46.0 billion surplus in December.
On the outlook, Jeong Woo Park, Korea economist at Nomura commented:
“We expect Korea’s exports to continue expanding at double-digit rates for the following reasons: A pick-up in chip prices amid strong tech demand is causing a global shortage of chips […]. The recovery in goods trade volumes: Despite the resurgence of virus across countries, the rollout of vaccines should help goods trade volume recover faster than services trade […]. Overall, we believe exports, which helped Korea overcome the economic fallout from the pandemic, will remain the real driving force of economic growth this year.”
Author: Frederico Teixeira de Abreu, Junior Economist