South Korea’s export growth slows in sign of bumpy momentum

SOUTH Korea’s export growth slowed in July, suggesting global demand may be cooling a touch after a boom in the artificial intelligence (AI) and technology sectors drove gains earlier this year.

Shipments reflecting working-day differences increased 7.1 per cent from a year earlier, according to data released on Thursday (Aug 1) by the customs office, decelerating from a double-digit gain in June.

Without the adjustment, headline exports rose 13.9 per cent offering a more flattering view of the strength of shipments, though the gain also proved weaker than expected. Overall imports increased by 10.5 per cent, a little below consensus. The trade surplus came in at US$3.6 billion.

South Korea’s export performance plays a big role in determining whether the economy will achieve an official mid-2 per cent growth forecast for 2024. The economy shrank last quarter after registering a stronger-than-expected expansion at the start of the year.

Policymakers have played down the setback, saying the underlying momentum of the economy remains intact. The Bank of Korea expects a global chip rally to be sustained to the first half of next year, and government officials are hopeful the export recovery will extend into other sectors across the economy.

Second-quarter operating profit reported by Samsung Electronics supports that view, having risen 15-fold from a year earlier. SK Hynix, another major chipmaker, has also said its second-quarter revenue more than doubled and its capex outlays this year would likely top earlier plans. BLOOMBERG