South Korean exports extend double-digit gains in early data

South Korea’s exports are poised to extend a run of double-digit gains in November, underpinned by chip and ship sales and signaling global demand remains solid in the run up to the year-end holiday season.

The value of Korea’s overseas shipments advanced 27.6% during the first 20 days of this month, the customs office reported Monday, following a 24% increase for the whole of October. Imports surged 41.9% during the period, led by a jump in the purchase costs of crude oil, gas and related products.  

Korea’s export data serve as an early indicator of global trade, and the ongoing resilience of overseas shipments offers grounds for optimism amid protracted supply disruptions. Still, headwinds to trade remain: the latest surveys of purchasing managers showed a weakening of manufacturing momentum in China, which is Korea’s largest trade partner.

The early trade report will be one of the final pieces of data reviewed by the Bank of Korea before it meets Thursday. Governor Lee Ju-yeol has sent clear signals that he intends to hike at the November review—and the board’s assessment of Korea’s trade strength will be important for the policy outlook. 

“South Korea export engine continues to roar strong,” said Trinh Nguyen, senior economist at Natixis SA. “This will help support growth and cements the BOK’s decision to continue its tightening cycle of another 25 bps, ahead of the curve globally in terms of tightening.”

While exports have been the backbone of Korea’s recovery from the pandemic, economists expect the pace of expansion to decelerate as demand normalizes from virus-era anomalies. With exports having registered gains since November 2020, the base effect boost is also set to begin dissipating. 

What Bloomberg Economics Says..

“Growth is set to slow further from the start of 2022 as global demand normalizes… But higher prices due to supply-demand imbalances should also continue to buoy export receipts in the near term, keeping nominal growth in the double digits.”

—Justin Jimenez, Asia Economist. For the full report, click here.  

Incorporating working-day differences with the year-earlier period, the value of daily exports during Nov. 1-20 was up 23.7% from a year earlier.  

For the whole 20-day period, chip exports increased 32.5%, while automobiles were down 1.9%. Overseas shipments of vessels jumped more than 250% and oil products gained 113.6%.  

By country:

• Overall shipments to China were up 24.2%
• those to the U.S. increased by 8.9%
• Exports to the European Union climbed 13.1% and;
• those to Japan advanced by 25.2%