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South Korea's August export rise for second month but miss forecasts

[SEOUL] Stronger global demand for memory chips and petrochemicals helped fuel an 8.7 per cent increase in South Korea's exports in August, marking a second straight month of gains amid escalating trade tension between China and the United States.

The rate of growth was somewhat less than expected, however. Analysts polled by Reuters had forecast a 10.1 per cent gain from a year earlier.

Exports stood at US$51.2 billion, slightly below July's US$51.9 billion, government data showed on Saturday.

Imports rose 9.2 per cent to US$44.3 billion, beating forecasts for a 7.7 per cent increase.

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That produced a provisional trade surplus of US$6.9 billion, little changed from July.

Yoon Jong Won, a top presidential aide on economic affairs, said on Thursday that South Korea's exports will continue to grow at a solid pace for a while, as exporters will benefit from an uptick in shipments of petrochemicals, memory chips, and robots, as well as renewable energy products.

Economists say trade tensions between the US and China have not yet dealt a serious blow to South Korean economy, though risks are mounting as President Donald Trump threatens to impose even more sweeping tariffs on Chinese goods within weeks.

"The Sino-U.S. trade war didn't seem to have had an impact in South Korea's August exports. Rather, a weaker won and robust US economy boosted demand for South Korean goods," said Lee Sang Jae, an economist at Eugene Securities.

"Having said that, there is good chance of exports shrinking if slapping of tariffs between the US and China widen," Mr Lee said.

South Korean exports grew 15.8 per cent in 2017, but policymakers expect the pace to slow down to 5.3 per cent this year and 2.5 per cent in 2019.

Of the nation's 13 major exports items, shipments of 10 items, including memory chips, petrochemical products, computers and steel products increased in August.

Sales of memory chips jumped 31.5 per cent on-year, continuing a stellar growth trend as the nation's chipmakers including Samsung Electronics and SK Hynix ride a "super-cycle" of tight supply and soaring demand for chips.

Car exports rose 0.5 per cent on-year, after dropping 13.7 per cent in July, as the launch of new models in the US boosted sales of South Korean cars, the government statement said.

By destination, exports to China, South Korea's biggest trading partner, jumped 20.8 per cent on-year while those to the US increased 1.5 per cent.

The nation's trade ministry said surging global oil prices helped boost the import tally in August.

"Imports of crude oil (and) liquefied natural gas rose with rising oil prices, while that for gasoline cars and medical supplies jumped to meet local demand," the trade ministry said in the statement.

Imports of crude oil increased 44.2 per cent on-year. 

REUTERS