South Korea’s exports are expected to climb by double digits again in June as much of the world’s economy shakes off the effects of the pandemic.
Exports rose 29.5% in the first 20 days of the month, year-on-year, according to customs office figures ($32.4 billion, compared to $25 billion). Average daily shipments also increased 33.7% in the period, when adjusted for calendar effects. The greatest increase by sector was automotive exports, up 62.2%, despite global supply shortages of automotive chips. Exports of petroleum products were also up 58.6%, though the good news did not extend to all sectors – exports of ships, for instance were down 27.7%.
Continued GDP gains
South Korea is Asia’s fourth-largest economy, and has been one of the better performers throughout the Covid-19 pandemic, powered by robust overseas demand for key products, including cars, chips, and petroleum products. Following a 1% contraction in 2020 overall, the country posted 1.6% growth in Q1, up again from 1.2% in the previous quarter, and beating expectations (the median estimate in a Reuters poll was 1%).
Last month, the Bank of Korea revised its 2021 growth outlook to 4%, up from an earlier forecast of 3%, citing solid export growth.
Exports lead the way
South Korea is an export-oriented economy, with exports typically accounting for more than 50% of GDP. Around a quarter of these go to China, followed by the US, EU, Vietnam and Hong Kong. High demand since the low-point in 2020 have led 7 straight months of strong export growth, hitting an incredible year-on-year increase in exports of 45.6% posted in May, the steepest growth in 32 years. As such, June’s results represent a return to more sustainable export growth levels.
China, Korea’s largest trading partner, managed to steer its economy relatively smoothly through 2020 (relative to many other large countries, that is) and, as such, is not delivering such great swings to Korea’s export figures as some others. During the first 20 days shipments to China were up 7.9% - compared to a 41.3% increase to the USA.
Even though the most eyebrow-raising monthly growth figures are probably past, for now, continued strong performance from South Korea, powerhouse industrial supplier to the world, is a welcome sign of global recovery.
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