South Korea’s exports are set to climb into double digits again in June as the global economy shakes up the impact of the pandemic, though the slow pace from recent months suggests the days of outlandish gains are over.
Exports grew 29.5% in the first 20 days of the month from a year ago, the customs office reported on Monday. Adjusted for calendar effects, average daily shipments increased 33.7% over the period, down half a business day from the prior year.
As vaccinations accelerate and worldwide lockdowns ease, South Korea has seen a surge in overseas demand for everything from memory chips to cars, smartphones and other consumer goods. Profit for the full month of May was lower than the 45.6 per cent jump, mainly due to a less favorable base effect, while exports may pick up in the remaining days of the month.
South Korea’s trade figures offer a timely assessment on the health of global commerce as its manufacturers are widely positioned in supply chains. The US, Europe and Japan saw huge gains in sales, but the slow pace of growth in China suggests that export gains to other economies may also moderate as the recovery there enters a more mature post-pandemic phase.
Consumers in major economies can shift spending from goods to services as virus restrictions ease. Still, most economists agree that the export outlook for Korea remains positive.
“The time has come for the weakening of the export momentum on base impacts,” said Yoon Yo-sam, an analyst at Meritz Securities in Seoul. “But they will remain conducive enough not to disrupt the trajectory of economic growth while allowing the Bank of Korea to focus its attention on financial stability.”
Early June trade data suggests exports remain the driver of South Korea’s recovery, and are likely to reinforce the idea that the BOK is poised for an earlier rate hike than most developed peers. In a report last week, BOK said US fiscal stimulus, rising global ship sales, and increased demand from overseas consumers are likely to boost exports for the rest of the year.
Exports to China, South Korea’s biggest overseas market, rose 7.9% between June 1-20 compared to a year earlier. Overall semiconductor shipments increased 28.5%.
Exports to the US increased by 41.3%, while exports to the EU increased by 48.8% and Japan by 33%.
Car shipments grew 62.2%, while oil products grew by 58.6%. Sales of wireless communication equipment grew 15.8%. Ship exports fell 27.7%.
South Korea’s total imports grew 29.1% in the first 20 days of June.
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