Korea: Merchandise exports surge in February despite fewer working days
March 2, 2021
Merchandise exports jumped 9.5% on an annual basis in February (January: +11.4% year-on-year). The slowdown derived from fewer working days due to the Lunar New Year holidays, as average daily exports rose an impressive 26.4%. The surge was primarily driven by chip exports, which benefitted from higher prices amid shortages in the sector. Petrochemical products and automobiles also saw growth. Meanwhile, merchandise imports soared 13.9% in annual terms in February (January: +3.6% yoy), marking the best result since October 2018.
Consequently, the merchandise trade balance deteriorated from the previous month, recording a USD 2.7 billion surplus in February (January 2021: USD 3.8 billion surplus; February 2020: USD 3.9 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 47.7 billion surplus in February, compared to the USD 49.0 billion surplus in January.
Going forward, exports should continue benefiting from stronger external demand, a red-hot chip market and U.S. stimulus. Meanwhile, a fourth stimulus package should aid a rebound in domestic activity which will in turn should spur imports, thus limiting the increase in the trade surplus this year.On the outlook, Jeong Woo Park, Korea economist at Nomura commented:
“With the rollout of vaccinations and large fiscal stimulus underway in the U.S., the February exports data support our positive view that export growth is set to accelerate to double-digits in coming months. We expect export growth to rise strongly to an average of ~50% y-o-y in Q2 due to base effects before easing, although it is likely to sustain its sequential growth momentum into H2.”
Author: Frederico Teixeira de Abreu, Junior Economist