Korea: Merchandise balance turns positive in June for first time in 16 months
Merchandise exports decreased 6.0% over the same month last year in June (May: -15.2% year on year). June’s figure marked the softest fall since October 2022. Meanwhile, merchandise imports dived 11.7% on an annual basis in June (May: -14.0% yoy).
As a result, the merchandise trade balance turned positive for the first time since February 2022, recording a USD 1.1 billion surplus in June (May 2023: USD 2.1 billion deficit; June 2022: USD 2.5 billion deficit). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 63.1 billion deficit in June, compared to a USD 66.7 billion deficit in May.
The reason exports fell less in June was statistical, as there were more working days in June 2023 than in June 2022. Adjusting for this by looking at average exports per day, the annual rate of contraction accelerated to -10.1% yoy in June from -9.3% yoy in May. Exports to China continued to tank despite the country reopening from Covid-19 earlier this year. More positively, automobile shipments continued to rise sharply again.
Nomura’s Jeong Woo Park said:
“Export growth has already bottomed out on a year-on-year basis and should rise further after the July export data due to stabilizing export prices and more positive base effects ahead. However, we expect export growth to remain negative throughout H2 and the trade balance to swing back to a deficit.”