Tue, Jul 02, 2024 page12

• S Korea export growth accelerates on record chip sales

  GROWING ECONOMY: Semiconductor shipments soared 51 percent from a year earlier and the outlook for exports remains bright, but it might face US and China-related risks

  • Bloomberg
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  South Korea’s export growth accelerated last month, reflecting resilience in global demand, as the artificial intelligence and technology sectors drive record gains in semiconductor sales.

  Average daily shipments increased 12.4 percent from a year earlier, data released yesterday by Korea Customs Service showed, compared with 9 percent growth in May.

  Headline exports, which do not reflect differences in the number of working days in the reporting month, rose 5.1 percent to US$57.07 billion, while overall imports fell 7.5 percent to US$49.07 billion. That resulted in a trade surplus of US$8 billion, the biggest since 2020.

  

  South Korean Ministry of Trade, Industry and Energy trade and investment office head Choi Woo-seok gives a briefing on the country’s June exports at the government complex in Sejong, South Korea, yesterday.

  Photo: EPA-EFE/Yonhap

  The value of semiconductor shipments amounted to US$13.4 billion, soaring 51 percent from a year earlier last month, the South Korean Ministry of Trade, Industry and Energy said in a statement.

  Display products rose 26 percent and exports of computers increased 59 percent from a year earlier, while the sales of wireless communications devices advanced 3.9 percent, the ministry said.

  Demand from the US led the gains in exports, with shipments to the world’s largest economy rising 14.7 percent from a year earlier to US$11.02 billion last month, while sales to China increased 1.8 percent to US$10.7 billion, marking a fourth month of growth.

  South Korea’s largest trade surplus since September 2020 supports the view that the economy might grow more than previously forecast this year.

  It also suggests that the weakening of the local currency is forcing importers to cut back on purchases from abroad, Korea International Trade Association analysis and forecasts director Austin Chang said.

  In a separate survey released yesterday by the Federation of Korean Industries, South Korean firms said stability in the foreign exchange market ranks as the most important policy objective from their perspective.

  They see 1,332 as the preferred level for the won against the US dollar, the survey showed.

  The won was about 1,378 against the US currency mid-morning yesterday.

  Almost two-thirds of major South Korean companies in the survey said they expect exports to keep rising in the second half of this year.

  Separate data released yesterday also pointed to continued strength in the factory sector, as S&P Global’s manufacturing purchasing managers index rose from 51.6 in May to 52 last month, its highest since April 2022.

  While the outlook for exports remains bright, South Korea might face the risk of cheaper goods from China if the world’s largest manufacturing country floods the market with them to ride out its economic trouble, Chang said.

  Meanwhile, South Korean businesses might also have to grapple with stronger trade protectionism and fewer tax incentives in the US in the longer term, should former US president Donald Trump retake the White House in November elections, he added.
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