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South Korea's May exports rebound sharply on robust global chip demand
[SEOUL] Solid global demand for memory chips and petrochemical products helped South Korea's exports return to growth in May, a welcome sign for Asia's fourth-largest economy which is facing headwinds from weak domestic consumption and trade protectionism.
Shipments grew 13.5 per cent to US$50.9 billion from a year earlier, above the 12.7 per cent forecast in a Reuters survey and a sharp rebound from a 1.5 per cent contraction in April, government data showed on Friday.
The strong exports bounce should come as a relief to policymakers as the economy navigates challenges of a soft recovery in the job market, weak domestic consumption and global trade frictions amid a simmering US-China tariff spat.
"The downturn in April was temporary from base effect. Exports isn't doing bad at all," said Lim Hye-youn an economist at Daishin Securities.
"Demand for memory chips is still supporting exports, but the pace of growth is likely to wane down towards the year-end on slowing global demand."
South Korea is a leading suppliers of smartphones, displays and cars and is the first among major exporting countries to publish its monthly trade figures.
In April, exports fell 1.5 per cent and marked the first decline since October 2016 when shipments fell 3.2 per cent. The nation's trade ministry said the decline was affected by a high base of comparison, as April 2017 saw bumper growth of 23.8 per cent from shipments of expensive vessels.
There are worries the US administration's stiff tariffs on some exports from major trading partners could trigger counter-measures from many countries including China, South Korea's biggest trading partner, and escalate global trade tensions.
Friday's data also showed imports surged 12.6 per cent in May, beating the 10.7 per cent growth seen in the survey.
That produced a US$6.7 billion trade surplus, up from the US$6.6 billion in April.
A separate central bank statement on Friday showed the economy expanded 1.0 per cent in the first quarter from three months earlier, slightly below the 1.1 per cent estimated earlier.
The government is expecting annual growth of 3 per cent this year, supported by the chip boom and an increase in fiscal spending.