Korea: Export growth decelerates in February due to the Lunar New Year
In February, merchandise exports increased 4.0% compared to the same month last year—substantially less than January’s 22.2% growth—and totaled USD 44.9 billion. The slower growth figure was primarily due to the Lunar New Year taking place in February this year—last year it took place in January—resulting in fewer working days. Sales abroad of Korean semiconductors, computing devices, petroleum products and ships underpinned export growth in February. Despite the slowdown, February’s result represented the sixteenth consecutive month of export growth and was higher than market analysts had expected. Meanwhile, amid higher oil and natural gas prices, imports increased year-on-year 14.8% in February, a deceleration from January’s growth of 20.9%.
The trade surplus narrowed to USD 3.3 billion in February from USD 3.7 billion in the previous month and USD 7.0 billion in the same month last year. Meanwhile, the 12-month trailing trade surplus amounted to USD 92.9 billion in February, less than the USD 96.5 billion surplus recorded a month earlier.
There is reason to be optimistic about the external sector this year, a sector which contributes significantly to the Korean economy. Tourism exports, for example, should benefit from the PyeongChang Olympic Winter Games and the subsequent Paralympics. Moreover, warmer relations between the governments of Korea and China should translate into a small pick-up in Chinese tourists visiting Korea this year. A healthy global economy should also continue to support demand for key Korean merchandise exports, too. There are potential obstacles to the external sector’s economic contribution, however, including more restrictive trade policies abroad, particularly from the United States.