Korea: Exports decline for third consecutive month in July
July 1, 2019
Merchandise exports sank 11.0% over the same month a year prior in July, following the 13.5% plunge logged in June, totaling USD 46.1 billion in July (June: USD 44.2 billion). Merchandise imports, meanwhile, fell 2.7% in July, improving from the 11.1% fall in June, and totaling USD 43.7 billion (June: USD 40.0 billion). The trade sector continues to be languished by adverse external conditions due to weak global tech demand, falling semiconductor prices, and the ongoing U.S.-China trade war. While Japan imposed export restrictions on Korean goods in June, the Korean Ministry of Trade, Industry and Energy noted it appears to have had a limited impact on exports in July.
The merchandise trade surplus narrowed notably to USD 2.4 billion in July from the from the USD 6.9 billion surplus in the same month a year prior (June 2019: USD 4.2 billion surplus). Meanwhile, the 12-month moving sum of the trade balance narrowed to a USD 53.5 billion surplus in July from the USD 58.1 billion surplus in June.
The outlook for Korea’s external economy looks increasingly gloomier as the U.S. recently escalated trade tensions with China by imposing additional tariffs on the remaining Chinese imported goods that go into effect in September. Meanwhile, the South Korea-Japan trade row also intensified in recent weeks as thousands of Korean protesters rallied in Seoul after Japan removed South Korea from its favored trading nations list. Trade protectionism alongside slumping semiconductor prices will likely continue to hamper Korea’s export-oriented sectors in the quarters ahead causing the slowdown to further seep into the domestic economy.
Author: Lindsey Ice, Economist