Imports in Korea

Korea - Imports

Exports stagger significantly in June

Merchandise exports tumbled 13.5% in annual terms in June, down from the revised 9.5% contraction logged in May (previously reported: -9.4% year-on-year), totaling USD 44.2 billion in June (May: USD 45.9 billion). Merchandise imports, meanwhile, fell 11.1% in June, worsening from the 1.9% dip registered in May, and totaling USD 40.0 billion (May: USD 43.6 billion). June’s poor performance was underpinned by falling foreign demand amid a sluggish global tech sector, weakening Chinese economy, and the prolonged U.S.-China trade dispute.

The merchandise trade surplus narrowed to USD 4.2 billion in June from the USD 6.1 billion surplus in the same month a year prior (May 2019: USD 2.2 billion surplus). The 12-month moving sum of the trade balance narrowed for the 10th consecutive month to a USD 58.1 billion surplus in June from the USD 60.0 billion surplus in May.

Commenting on developments in the region and their impact on Korea’s external sector, analysts at Nomura noted:

“Although some positive market reaction to the relatively positive outcome of the US-China summit meeting may help partly ease downside pressures, our US economics team continues to believe the US will move forward with additional tariffs on the remainder of US imports from China at some point in the near future. Moreover, Japan’s IT materials sanctions announced on 1 July could pose further downside risk to the Korean tech sector. We continue to expect 2019 GDP growth to slow sharply to 1.8% from 2.7% in 2018, far below potential GDP growth (Nomura estimate: ~2.5%).”

In 2019, FocusEconomics panelists expect merchandise exports contract 2.5% and imports to rise 0.8%, bringing the trade surplus to USD 92.4 billion. In 2020, exports and imports are expected to increase 4.7% and 5.2% respectively, resulting in a trade surplus of USD 94.0 billion.