South Korea export downtrend likely slowed in June, offers hope for global trade: survey

SOUTH Korea’s downtrend in exports likely slowed in June, with the trade balance set to swing to a surplus for the first time in 16 months, a Reuters survey showed, raising the prospect of an end to a sustained fall in shipments that began late last year.

South Korea – a bellwether for global trade – is the first major exporting economy to report monthly trade figures, providing clues on the health of world demand.

Outbound shipments in June were expected to have fallen 3.0 per cent from the year before, much slower than the 15.2 per cent drop in May, according to the median estimate of 17 economists in the survey conducted from Jun 22 to Jun 28.

That would mark the slowest fall for the current trend of year-on-year declines that began in October 2022. Two of the surveyed economists predicted marginal growth in exports for this month.

“We expect the trend of South Korean exports to improve gradually going forward with continuously robust automobile exports and smaller losses in semiconductor exports,” said economist Chun Kyu-yeon at Hana Securities.

“There is a high possibility of a significant rebound in the growth rates during the second half of this year,” Chun said.

Global demand for goods has been weakening over the past year as many economies struggled with high inflation and the subsequent streak of interest rate increases to tame price pressures.

A positive turn in shipments in South Korea might offer some hope of a recovery in global export trade, though data in China has so far continued to show softness.

In the first 20 days of this month, South Korea exported goods worth 5.3 per cent more than the year before, logging the first increase since August, thanks to sharp gains in cars and ships as well as a softer fall in semiconductors.

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“If it is confirmed that the exports recovery is being led by semiconductors, it would be a clear positive for the growth outlook for the second half,” wrote Oh Suk-tae, an economist at Societe Generale.

“The financial market would also welcome a potential trade surplus for the first time since February last year,” Oh added.

The country’s imports in June likely fell 11.0 per cent from a year earlier, after a 14.0 per cent drop in May, according to the survey, which also provided a median forecast for a monthly trade surplus of US$2.51 billion.

South Korea will report its full monthly trade figures for June on Saturday, Jul 1, at 9.00 am (0000 GMT). REUTERS