Automobile exports help S. Korea reverse negative trade growth

Posted on : 2023-11-02 16:53 KST Modified on : 2023-11-02 16:53 KST
While the improvements in semiconductors and exports to China are a positive sign, it’s too soon to conclude whether exports are in a full-on recovery
(Getty Images Bank)
(Getty Images Bank)

South Korean exports are back in positive territory after a year of declines. Korea also posted a trade surplus for the fifth month in a row.

According to figures released Wednesday by Korea’s Ministry of Trade, Industry and Energy, Korea’s exports in October were worth US$55.09 billion, up 5.1% from the same month last year. Since Korea’s monthly export value had fallen continuously from October 2022 to September 2023, that put exports up for the first time in 13 months.

Exports of semiconductors, Korea’s biggest export item, were valued at US$8.94 billion in October, representing a year-over-year decline of 3.1%.

But the rate of that decline was the lowest posted this year. The rate peaked in the first quarter of 2023 at 40.0%, before declining to 34.8% in the second quarter and then further to 22.6% in the third quarter. And now in October, the rate of decline was in the single digits.

Exports of DRAM and NAND memory, both leading products, stood at US$4.51 billion for a 1% increase from the same month last year. The rate of decline of chip exports to China also softened to 2.9% (based on customs data from Oct. 1-25).

The rebound in exports was led by automobiles (19.8%), another major export item; automobile exports have been on the rise for 16 consecutive months. In addition, general machinery (10.4%), home appliances (5.8%), ships (101.4%), displays (15.5%) and petrochemical products (18.0%) all posted rates of increase in the double digits or above.

Korea’s imports last month were worth US$53.46 billion, decreasing 9.7% year over year. The drop was largely driven by a 22.6% decrease in imports of energy, including oil and gas. But even excluding energy, the value of imports (US$41.46 billion) was still down 5.0% from last year.

Korea had a surplus of US$1.64 billion in its balance of trade (calculated by subtracting imports from exports), maintaining a trade surplus that dates back to June.

While the improvements in semiconductors and exports to China are a positive sign, it’s too soon to conclude whether exports are in a full-on recovery.

“Exports have touched bottom and appear to be making a slow turnaround. Given poor performance last year, there’s obviously a base effect at work, and we’ll have to wait until early next year to gauge whether we’ve entered a full-fledged recovery phase,” said Cho Sang-hyeon, the director of the Institute for International Trade at the Korea International Trade Association.

By Kim Hoe-seung, senior staff writer

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