Korea: Merchandise exports increase in August but clouds loom on the trade horizon
September 3, 2018
In August, merchandise exports rose 8.7% compared to the same month last year, totaling USD 51.2 billion and up from July’s 6.2% growth. Export categories that performed best in August were petroleum products, semiconductors, steel, petrochemicals, general machinery and computers, in descending order. Merchandise imports grew 9.2% in August (July: +16.2% year-on-year), reaching USD 44.3 billion, primarily due to increased imports of crude oil and liquified natural gas.
The merchandise trade surplus slipped to USD 6.9 billion in August from USD 7.0 billion in July (August 2017: USD 6.6 billion). The 12-month trailing surplus amounted to USD 79.8 billion in August from USD 79.5 billion in July.
Looking ahead, a growing global economy should continue to support demand for key Korean merchandise exports. However, the global growth trajectory is expected to slow in second half of this year and foreign trade policies increasingly pose a downside risk to the Korean external sector. For example, although Korea and the U.S. agreed in principle to a revised free trade agreement in March, the implementation of this would be at risk if the U.S. imposed a blanket tariff on automobile imports later this year. Furthermore, given the interconnected nature of Korean industry and the global supply chain, any slowdown in trade in Asia due to trade protectionism would almost certainly hurt Korean exports.
Author: Edward Gardner, Economist