Korea: Merchandise exports grow quickly in May, boosted by semiconductor shipment growth
June 1, 2018
In May, merchandise exports grew 13.5% compared to the same month last year, totaling USD 51.0 billion. This represented a contrast to the 1.5% fall in April and the best performance in eight months. Major categories of exports such as semiconductors, computers, general machinery, petrochemicals, petroleum products and automobiles all expanded in May. Merchandise imports grew 12.6% in May (April: +14.5% year-on-year) due to increased purchases of oil, computer storage devices and liquified natural gas from abroad.
The merchandise trade surplus increased to USD 6.7 billion in May from USD 6.6 billion in April and USD 5.6 billion in the same month last year. The 12-month trailing surplus amounted to USD 88.4 billion in May (April: USD 87.3 billion).
On balance, there is reason to be optimistic about the external sector for the rest of this year. A thaw in relations between the governments of China and Korea should lead to an uptick in Chinese tourist arrivals in Korea. In April, for example, tourist arrivals were up by more than half according to the Korea Tourism Organization, although this was primarily due to a base effect. A healthy global economy should also support demand for key Korean merchandise exports, particularly semiconductors. However, downside risks include more restrictive trade policies abroad, particularly from the United States. 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