Korea: Trade surplus widens in July
August 1, 2017
Exports in July soared 19.5% from the same month last year, totaling USD 48.8 billion. This was considerably above June’s 13.6% expansion and reflected a delayed shipbuilding delivery and near record-growth in semiconductor exports, which more than outpaced a decline in outbound shipments of auto parts. Conversely, imports decelerated from a 19.8% year-on-year increase in June to a 14.5% expansion in July, totaling USD 38.2 billion.
As a result of faster growth in exports and a slower expansion in imports, the trade surplus widened from the same month of last year. The trade surplus stood at USD 10.6 billion in July, well above the USD 7.5 billion surplus recorded in the same month of the previous year. The result drove the 12-month trailing trade surplus to total USD 89.4 billion in July, which marked an improvement over the USD 86.2 billion registered in June and the strongest reading since October 2016.
Notwithstanding the strong start to the quarter, Korea’s external sector will likely lose momentum towards year end as Chinese demand continues to ebb and the commodity-linked base effect fades away. While some support will still be found from the launching of the iPhone 8 and higher prices for certain electronic goods, the external sector’s contribution to GDP is likely to decrease in upcoming quarters.
Author: David Ampudia, Economist