Exports from South Korea have grown consistently across 4 quarters, posting a double digit growth in June, propelled by a strong economic recovery in major markets globally and continued strong demand for memory chips and automobiles.
In June, South Korean exports surged by 39.7% against the same month a year earlier, and touched its third biggest value on record at $54.80 billion, said the South Korean trade ministry. South Korea’s exports jumped by 45.6% in May – its sharpest hike since August 1988.
“As base effect (from the coronavirus) fades, the growth rate itself probably reached the peak in May … but the exports value will likely continue growing in the third quarter,” said Park Sang-hyun, chief economist at Hi Investment & Securities.”We expected weakened Chinese demand due to shipping delays and supply-chain disruptions but the impact is seen limited, with exports to other ASEAN economies improving.”
South Korea’s trade data is closely watched since it is the first to be released among major exporting economies and is widely seen as a bellwether for global trade.
South Korea’s top export, sales of semiconductors, grew for the 12th month in a row, by 34.4%, while those of cars and petrochemical products surged 62.5% and 68.5% respectively. Exports to China, the EU, and the US soared by 14.3%, 51.9% and 65.3% respectively.
South Korea’s exports face fresh risks from coronavirus-induced COVID-19 Delta variant, said economists.
“Exports to China may fall to single-digit growth as China’s June manufacturing PMI (purchasing managers index) signalled weakening recovery momentum… Delta virus and related lockdown measures are also a potential risk to exports,” said Park.
In June, data on Chinese factory activity slumped to a four month low on higher raw material costs, shortage of semiconductors and an outbreak of COVID-19 in Guangdong, a major export province.
South Korea’s imports also grew by 40.7% in June, with trade surplus standing at $4.44 billion.
Earlier this week, the finance ministry sharply upgraded its 2021 growth forecast to an 11-year high of 4.2%, with an 18.5% jump in exports towing the expansion.