South Korea’s Exports Rise but Miss Expectations

By Jihoon Lee

SEOUL (Reuters) – South Korea’s exports increased at their fastest rate in six months in July, driven by strong chip sales, though they fell short of market expectations, according to trade data released on Thursday. Concerns linger about the sustainability of demand from China.

Overseas sales from Asia’s fourth-largest economy rose by 13.9% year-on-year to $57.49 billion, a rise from 5.1% in the previous month, marking the highest growth since January. However, this growth was below the 18.4% increase anticipated in a Reuters survey of economists.

Semiconductors, which saw growth for the ninth consecutive month, surged 50.4%, alongside gains in other IT products. However, automobile exports fell by 9.1% due to earlier summer vacation schedules at major auto companies.

In terms of destinations, exports to the United States increased for the 12th month straight, climbing 9.3%, while shipments to China jumped 14.9%, reaching a 21-month high of $11.4 billion.

“Last month was somewhat disappointing, even after adjusting for base effects,” remarked Park Sang-hyun, chief economist at HI Investment Securities. “Export momentum is waning, and while China will play a crucial role, recent indicators lead to doubts about its economic recovery’s sustainability.”

China’s manufacturing sector faced challenges in July, with factories dealing with declining new orders and low prices, suggesting a challenging second half for the global production center.

Trade Minister Ahn Duk-geun noted, “Exports started strong in the second half of the year,” reiterating the government’s ambition to achieve record-high exports in 2023.

Imports rose by 10.5% in July, amounting to $53.88 billion, following a 7.5% drop in June. This marked the fastest increase since September 2022, yet it was slower than the 13.4% growth predicted by economists.

Consequently, South Korea recorded a trade surplus of $3.62 billion in July, down from $7.99 billion in the previous month, the largest surplus since September 2020.