Korea: Growth in exports accelerates slightly in March, boosted by strong semiconductor sales
April 2, 2018
In March, merchandise exports increased 6.1% compared to the same month last year—more than February’s 4.0%—and totaled USD 51.6 billion. This represented the seventeenth consecutive month of export growth but still came in slightly below market analysts’ expectations. Sales abroad of Korean semiconductors, computing devices, petroleum products, general machinery, steel and textiles all underpinned export growth in March. Sales of semiconductors were particularly high, hitting over USD 10 billion, and were supported by overseas demand in growing markets such as those for the Internet of Things and autonomous vehicles. Meanwhile, imports increased 5.0% year-on-year in March (February: +14.8% year-on-year) amid high domestic demand for semiconductor manufacturing equipment and liquified natural gas.
The trade surplus widened to USD 6.9 billion in March from USD 3.3 billion in February and USD 6.1 billion in the same month last year. The 12-month trailing trade surplus amounted to USD 93.7 billion in March (February: USD 92.9 billion).
There is reason to be optimistic about the external sector this year. Tourism exports, for instance, should have benefited from the PyeongChang Olympic Winter Games and the subsequent Paralympics in the first quarter. Moreover, there are indications that trade relations between China and Korea, which have suffered since Korea installed a U.S. antimissile system early last year, could soon improve. On 30 March, for example, Chinese State Councilor Yang Jiechi had a positive meeting with Korean President Moon Jae-in, during which he said that there would be “tangible results in the future”. A healthy global economy should also support demand for key Korean merchandise exports.
There are potential obstacles to the external sector’s success, however, including more restrictive trade policies abroad, particularly from the U.S. Although Korea and the U.S. agreed in principle to a revised free trade agreement on 26 March, Korea’s external sector could nevertheless be hit by growing trade tensions between the U.S. and China.
Author: Edward Gardner, Economist