South Korea’s early exports returned to growth for the first time in more than a year in another indication of recovering external demand that would offer some reassurance to investors and policymakers monitoring the health of global commerce.
Daily average shipments for the first 20 days of this month increased 8.6 percent from a year earlier in the first gain since September last year, data released yesterday from the Korea Customs Service showed.
The increase is a positive indication that world trade is starting to regain strength after a global slowdown and South Korea’s export figures are watched closely to get an early take on the trajectory of world trade.
Photo: Bloomberg
The gain is also an encouraging sign for the nation’s economy, given its heavy dependence on external demand to drive growth.
The trade report showed that total headline exports, which do not account for working-day differences, rose 4.6 percent from a year earlier for the 20 days this month, while imports increased 0.6 percent.
Exports to China fell 6.1 percent, for the smallest drop since summer last year, while those to the US increased 12.7 percent. Shipments to Japan rose 20 percent and those to Singapore soared 37.5 percent, the data showed.
Policymakers in Seoul have voiced hopes in the past few months that full-month exports would return to year-on-year increases before the end of the year. That would support stronger economic growth if it materializes as suggested by the early data for this month.
The sales of semiconductors, the biggest cash cow for the country, have also shown signs of bouncing back, especially NAND flash memory.
“In the end, the rebound in chip prices is leading the exports rebound,” Yuanta Securities Korea Co economist Jeong Won-il said. “We may see an odd economic situation of high growth, high rates and high inflation next year.”
In a separate report yesterday, the Bank of Korea highlighted the recovery in semiconductor demand and growing market optimism that it would continue to improve next year, citing the first increase in the price of DRAM in a year and a half last month.
South Korea sold US$5.2 billion in semiconductors over the first 20 days, 6.4 percent less than a year earlier. That is smaller than the 14.4 percent decline for the full month of last month, the trade report showed.
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