Korea: Trade surplus widens in August following record semiconductor exports
September 1, 2017
Korea’s exports extended their double-digit growth streak to eight months in August. Exports surged 17.4% over the same month last year, reaching a total of USD 47.1 billion. Although slightly below July’s 19.5% expansion, the reading was still exceedingly robust and reflected record-high exports of semiconductors and strong automobile sales overseas. These more than offset declines in auto parts and shipbuilding exports. Meanwhile, import growth slowed to 14.2% in year-on-year terms in August from 15.5% in July, totaling USD 40.1 billion.
The trade surplus widened from the same month last year as a result of exports’ stellar performance in August. The trade surplus stood at USD 7.0 billion in August, well above the USD 5.0 billion surplus recorded in the same month of the previous year. The result drove the 12-month trailing trade surplus to a total of USD 90.9 billion in July, which marked an improvement over the USD 88.9 billion surplus registered in July and the strongest reading since October 2016.
Korea’s external sector will likely lose momentum towards year-end as the commodity-linked base effect fades away. While the launch of the iPhone 8 later this year and higher prices for certain electronic goods will provide some support, the external sector’s contribution to GDP is likely to decrease in upcoming quarters.
Author: David Ampudia, Economist