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South Korea April export growth hits near 6-year high, trade surplus with US falls
[SEOUL] South Korean exports rose at a much faster-than-expected pace in April, surging for a sixth straight month helped by robust demand for high-tech memory chips and adding confirmation to perceptions of broad recovery in the global economy.
Exports to the United States rose in April but South Korea's trade surplus with that country declined on an annual basis over the same period, Monday's data showed, potentially easing concerns Washington may impose protectionist measures that could hurt South Korea's economy - Asia's fourth-largest.
US President Donald Trump said last week in an interview with Reuters that he was seeking to change a free trade deal with South Korea or scrap it entirely.
Preliminary data showed April's exports soared 24.2 per cent from a year earlier to US$51.01 billion, while imports surged 16.6 per cent to US$37.75 billion to create a US$13.25 billion trade surplus, the Ministry of Trade, Industry and Energy said.
Exports rose at the fastest pace since August 2011 when they gained 25.5 percent.
Shipments to the United States rose 3.9 per cent on-year in April, rebounding from a 5 per cent fall in March, the official breakdown showed. South Korea's trade surplus with the United States was US$1.68 billion in April, down from US$2.52 billion a year before.
Machinery, oil products and household electronics were the main drivers of exports to the United States last month.
"If this trend continues, South Korea will have likely escaped one of the criteria for currency manipulator designation," said An Ki Tae, an economist at NH Investment & Securities, adding the trade surplus with the United States was likely to fall below US$20 billion this year if it kept declining at the current tempo.
"The controversy over trade with the United States will probably fade at this rate," he said.
A US trade and customs enforcement law enacted last year set out three criteria for identifying manipulation among major trading partners: a "material" global current account surplus, a "significant" bilateral trade surplus with the United States, and persistent one-way intervention in foreign exchange markets.
South Korea is currently in the process of reducing its trade surplus with the United States, Finance Minister Yoo Il Ho said on Sunday.
Meanwhile, exports to China rose 10.2 per cent on-year in April versus a 12.1 per cent gain in March. Last month's gain was thanks to the booming construction sector and capital expenditure in China, the data showed.
The trade ministry said it was aiming to diversify South Korea's export destinations to reduce reliance on markets such as the United States and China, given persistent downside risks.
Overall, semiconductor chip and flat display panel exports boosted headline export performance in April, jumping 56.9 per cent and 10.2 per cent on-year respectively. Ship exports also lent a hand, soaring 102.9 per cent.
With the general downturn in the shipbuilding industry, every ship delivery results in spikes in data, but even without the ship deliveries, exports would still have risen 16.8 per cent on-year in April, the trade ministry said.
"It will be difficult for exports to maintain growth in the 20 per cent range, we'll likely see growth slow a bit in the second half of the year as the base effects subside from crude oil products which drove export growth in the first quarter," said Park Sang Hyun, chief economist at HI Investment & Securities.
South Korean financial markets are closed on Monday for a public holiday.
The average export value per working day was US$2.27 billion in April, compared to US$2.04 billion in March, according to Reuters calculations.
Exports have been gaining since November last year, bolstering economic growth in the first quarter. Central bank data last week showed first-quarter gross domestic product growth was a faster-than-expected 0.9 per cent, the quickest in three quarters.
Last week, the trade ministry upgraded its export outlook for the year to between 6 and 7 per cent growth from 2.9 per cent seen previously.