South Korea’s March exports climb for 17th straight month, misses forecast
SEOUL: South Korean exports grew less than expected in March, adding to worries about the outlook for global demand amid growing fears of a US-China trade war and a resurgence in protectionism.
Booming demand for South Korean memory chips and computers across China and Europe lifted March exports, while shipments to the US fell amid rising US protectionism, resulting in a smaller trade surplus with Washington.
March exports grew 6.1 per cent to US$51.6 billion from a year earlier, below 7.5 per cent seen in a Reuters survey but outperforming a revised 3.9 per cent expansion in February, government data showed.
Imports increased five per cent to US$44.7 billion, less than the 6.2 per cent growth economists had expected and compared with a revised 14.9 per cent in February.
That resulted in a trade surplus of US$6.9 billion, up from US$3.2 billion in the previous month.
The soft February readings were likely skewed by the long Lunar New Year holiday which fell in the middle of the month this year but in late January last year.
Exports grew 10.3 per cent in January-March combined from a year earlier, slower than the 14.6 per cent expansion seen during the same period in 2017.
“Exports growth is steady, it’s likely to continue to post single- digit expansion. But there’s dangers of a global trade war, a downside risk to Korea exports,” said Park Sang-hyun, a Seoul-based economist at HI Investment & Securities.
Shipments to the US declined one per cent in the first 20 days of March from a year earlier even as Korean memory chips sold well, as American demand for South Korean cars were sluggish.
Exports to China and the European Union jumped 16.6 per cent and 24.2 per cent, respectively.
South Korea’s trade surplus with the US stood at US$1.05 billion as of March this year, down by about 41.5 per cent from the same time last year amid ongoing efforts by Seoul to import more from the US in the past year.
Korea’s trade ministry data shows that a drop in car exports combined with a steady increase in imports of US beef, oranges and aircraft engines have resulted in a decline in the trade surplus with the US.
The Bank of Korea expects the trade-reliant economy to expand by three per cent this year after 3.1 per cent growth in 2017, the fastest expansion since it grew 3.3 per cent in 2014.
However, policymakers are wary of risks to exports as the Trump administration begins rolling out a series of punitive trade measures which would hit countries such as South Korea and its biggest trading partner, China.
The US and South Korea agreed last week to revise their six-yearold free trade agreement with a side deal to deter competitive currency devaluation by Seoul and give more access for US automakers and drugmakers to the South Korean market.
The deal also lifted the threat of a 25 per cent US tariff on imports of steel from South Korea in exchange for quotas that will effectively cut US imports of Korean steel by about 30 per cent. Without the agreement in place, the tariffs would take effect on May 1.
But President Donald Trump said on Thursday he may hold up the trade agreement reached with South Korea until after a deal is finalised with North Korea on denuclearization, increasing uncertainties for the trade outlook. — Reuters