Korea: Export growth accelerates in January
In January, exports increased 22.2% compared to the same month in the previous year—substantially more than December’s 8.9% growth—and totaled USD 49.2 billion. This stellar growth represented the fifteenth consecutive month of growth in exports and was driven by a surge in shipments of semiconductors, which benefitted from strong global demand for computer servers and smart phones. Meanwhile, with commodity prices high in January, imports totaled USD 45.5 billion, as the year-on-year growth rate accelerated from 13.0% in December to 20.9%. Both export and import growth were upwardly affected by 3.5 more working days in January compared to the same month in 2017.
The trade surplus narrowed from USD 5.5 billion in December to USD 3.7 USD billion in January, which was less than the USD 2.6 billion surplus recorded in January 2017. Meanwhile, the 12-month trailing trade surplus amounted to USD 96.5 billion in January, more than the USD 95.4 billion recorded in December.
The external sector contributes significantly to the Korean economy and there is reason to be optimistic about the sector this year. Tourism exports, for example, could get a boost from the PyeongChang Olympic Winter Games this month. Moreover, warmer relations between the governments of Korea and China could translate into more Chinese tourists visiting Korea this year. A healthy global economy should also support demand for Korean semiconductors, general machinery and petrochemicals. There are potential obstacles to the sector’s economic contribution, however, including a strong Korean won and more restrictive trade policies abroad.