Korea: Merchandise exports increase in July
August 1, 2018
In July, merchandise exports rose 6.2% compared to the same month last year, totaling USD 51.9 billion. This represented a contrast to the 0.1% fall in June. Export categories that observed the strongest growth in July were petroleum products, semiconductors and chemical products, in descending order. Merchandise imports grew 16.2% in July (June: +10.7% year-on-year), reaching USD 44.9 billion. This was primarily due to increased imports of crude oil on the back of higher prices.
The merchandise trade surplus rose to USD 7.0 billion in July from 6.2 billion in June (July 2017: USD 10.2 billion). The 12-month trailing surplus amounted to USD 80.3 billion in July compared to USD 83.5 billion in June.
Looking ahead, a growing global economy should continue to support demand for key Korean merchandise exports, particularly semiconductors. However, downside risks include more restrictive trade policies abroad. For example, although Korea and the U.S. agreed in principle to a revised free trade agreement in March, Korea’s external sector could be hit by growing trade tensions between the U.S. and China. Moreover, an expected decision later this year from the U.S. on whether to unilaterally impose tariffs on automobile imports from around the world could result in pain for Korean exporters if it does not go their way.
Korea Trade Balance Forecast
In terms of merchandise trade, FocusEconomics panelists expect exports to expand 8.4% in 2018 and imports to rise 7.4% this year, bringing the trade surplus to USD 108.3 billion. In 2019, exports are expected to increase 6.5% and imports to increase 5.4%, resulting in a trade surplus of USD 121.0 billion.
Author: Edward Gardner, Economist