South Korea Trade Surplus Far Below Estimates in May


South Korea’s trade surplus plunged to USD 2.27 billion in May 2019 from USD 6.23 billion in the same month a year earlier and missing market expectations of a surplus of USD 5.07 billion, a preliminary data showed. This was the smallest trade surplus since January, mainly due to a slump in exports.

The latest data came in hours after President Trump threatened to impose tariffs on all Mexican imports from June 10 in an attempt to reduce the flow of illegal migrants, prompting fears of recession in the major economies.

Year-on-year, exports plummeted 9.4 percent to USD 45.91 billion in May, worse than market consensus of a 5.6 percent drop and much faster than a 2.0 percent fall in the previous month. It marked the sixth straight month of contraction in overseas sales, amid weakening global demand and the prolonged Sino-US trade dispute as well as Brexit uncertainties. Outbound shipments of semiconductors, the bellwether for the country's exports, tumbled 30.5 percent, largely due to falling prices of chips and the subdued demand for smartphone as well as a base effect. In addition, exports of petrochemical products shrank 16.2 percent, amid weaker demand from China. On the other hand, sales of ships jumped 44.5 percent. At the same time, shipments of machinery grew by 5 percent, with auto exports increasing 13.6 percent. Also, exports rose for rechargeable batteries, electric cars, and organic light-emitting diode (OLED) displays. 

Exports to China, the largest trading partner for Asia's fourth-largest economy, nosedived 20 percent, the steepest yearly fall since January 2016. Also, sales to the EU fell 12.6 percent after a slowdown in Germany's economy. In contrast, outbound shipments to the US advanced 6 percent, led by higher sales of automobiles and home appliances.

For the second half of 2019, the government expects exports to recover, supported by better prices of chips and the effects of China's economic stimulus measures.

Imports dropped unexpectedly by 1.9 pecent to USD 43.64 billion, against market estimates of a 0.4 percent growth and following an upwardly revised 2.6 percent in April. Purchases of crude oil fell 13.5 percent to 82.3 million barrels.

Considering the first five months of the year, the trade surplus narrowed sharply to USD 15.6 billion from USD 25.02 billion in the corresponding period 2018. 

South Korea Trade Surplus Far Below Estimates in May


Rida Husna | rida@tradingeconomics.com
6/1/2019 3:02:35 AM