South Korea posts first trade surplus in 16 months on car sales

SOUTH Korea reported its first trade surplus in 16 months in June, helped by robust automobile exports and a decline in energy imports.

Headline exports dropped 6 per cent from the prior year, according to the trade ministry. This compares with economists’ expectations for a 3.6 per cent decline. Exports had sunk 15.2 per cent in May. Overall imports, meanwhile, fell 11.7 per cent in June, versus 14 per cent the previous month, resulting in a trade surplus of US$1.1 billion, the first surplus since February 2022.

The data provides the latest signal that the slump in demand for South Korean goods is easing. The nation’s exports serve as a barometer of international trade, as it sells goods that make their way into a variety of items, including chips, displays and refined oil.

“The exports drop has likely already bottomed out, but what’s more important from here is whether recovery will be shaped like a ‘V’ or an ‘L’,” said Moon Junghiu, an economist at KB Kookmin Bank, prior to the data release. 

Despite the improvement, lingering uncertainties remain over the timing of a rebound in the chip industry, a major driver of economic growth for South Korea. Future demand largely depends on a more robust expansion in its largest trading partner China, and where slack demand has raised concerns about its economic growth.

South Korean exports of chips slumped 28 per cent in June after falling 36 per cent in May, and exports of petroleum products were down 41 per cent. Overseas shipments of automobiles jumped 58 per cent. Shipments to China dropped 19 per cent from a year earlier, marking the 13th straight month of declines. Exports to the US, South Korea’s second-largest trading partner, slid 1.8 per cent.

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The trade ministry said that the government will boost efforts to increase exports and improve energy efficiency to achieve a positive figure in exports within the second half of the year.