Thursday August 01 2019
South Korea Trade Surplus Narrows as Exports Slump
MTIE | Joana Ferreira | joana.ferreira@tradingeconomics.com

South Korea's trade surplus narrowed sharply to USD 2.44 billion in July 2019 from USD 6.89 billion in the same month last year.

Exports from South Korea plunged 11 percent from a year earlier to USD 46.1 billion in July, the eighth consecutive month of declines and largely in line with market forecasts of 11.3 percent drop. The year-long China-US trade war and recent Japan's export restrictions hurt foreign demand, alongside a slowdown in the semiconductor sector and falling chip prices, and the petrochemical and petroleum product industries that are under pressure due to the stagnant recovery of oil prices.

Semiconductors exports, which make up about a fifth of the country's total exports, tumbled 28.1 percent; while petrochemicals sales moved down 12.4 percent due to falling oil prices and delayed purchases. The value of petroleum products shipped overseas slumped 10.5 percent on decreasing oil prices, fiercer competition, and the introduction of more refineries in Asia.

On the contrary, exports of automobiles advanced 21.6 percent boosted by increasing global demand for sport utility vehicles (SUVs) and eco-friendly vehicles. Outbound shipments of auto parts moved up 1.9 percent, after six months of contraction. The introduction of new models in the US, the EU, and Central and South America led to an expansion in parts exports. Sales of home appliances also climbed 2.2 percent on the back of robust sales of clothes dryers and air purifiers.

Among major trade partners, exports to China fell 16.3 percent amid lower demand for semiconductors, petrochemicals, general machinery, and displays; while sales to the US inched down 0.7 percent due to lower shipments of general machinery, wireless communications devices, semiconductors, and computers. Meanwhile, shipments to the EU edged up 0.3 percent on the back of automobiles, general machinery, and ships sales. The value of Korean goods shipped to ASEAN were up 0.5 percent and those to the CIS jumped 14.5 percent.

Meanwhile, imports declined 2.7 percent to USD 43.7 billion in July.

Considering January to July, the trade surplus shrank to USD 21.64 billion from USD 37.99 billion in the same period of 2018.




Thursday August 01 2019
South Korea Inflation Unexpectedly Edges Down to 0.6%
Mario | mario@tradingeconomics.com

South Korea's annual inflation rate edged down to 0.6 percent in July 2019 from 0.7 percent in the previous month and compared to market expectations of 0.85 percent.

Food and non-alcoholic beverages rose at a softer 0.8 percent (vs 2.0 percent in June) due to a 1.6 percent decline in the fresh food index, in particular fresh vegetables (-6.4 percent) and fresh fruits (-3.2 percent). Softer inflation was also recorded for restaurants and hotels (1.7 percent vs 1.8 percent) and alcoholic beverages and tobacco (0.8 percent vs 0.9 percent) while education inflation was flat at 1.1 percent and clothing prices showed no growth (vs -0.1 percent in June). In addition, declines were seen in prices of transport (-1.6 percent vs -1 percent), communication (-2.6 percent vs -2.8 percent), and recreation and culture (-0.2 percent vs -0.1 percent).

By contrast, inflation accelerated for housing, water, electricity, gas and other fuels (1.4 percent vs 1.2 percent); furnishings, household equipment & routine maintenance (2.1 percent vs 1.7 percent); health (1 percent vs 0.1 percent); and miscellaneous goods and services (1.8 percent vs 1.5 percent).

For 2019, the Bank of Korea targets inflation rate to be at 2 percent.

Core CPI, which excludes oil and agricultural products, advanced 1 percent year-on-year in July, following a 0.9 percent climb.

On a monthly basis, consumer prices fell 0.3 percent, after declining 0.2 percent in the previous month and compared to market forecasts of an unchanged reading.




Thursday July 25 2019
South Korea Q2 GDP Growth at Near 2-Year High
Bank of Korea | Mario | mario@tradingeconomics.com

South Korea’s GDP advanced 1.1 percent on quarter in the three months to June 2019, after a 0.4 percent contraction in the previous quarter and above market consensus of a 1.0 percent expansion. It was the strongest growth rate since the third quarter of 2017, as manufacturing and construction output rebounded and utilities surged 8.3 percent.

On the production side, output rebounded in manufacturing (1.8 percent vs -3.3 percent in Q1) and construction (1.4 percent vs -1.0 percent). Additionally, utilities surged 8.3 percent after showing no growht in the first quarter of the year. On the other hand, services activity expanded 0.6 percent, slowing from a 0.8 percent in the prior quarter; and agriculture, forestry and fishing shrank 3.7 percent, after expanding 4.7 percent in the previous period. 

On the expenditure side, final consumption expenditure rose 1.1 percent (vs +0.2 percent in Q1), boosted by both government expenditure (2.5 percent vs 0.4 percent) and private consumption (0.7 percent vs 0.1 percent). Gross fixed capital formation went up 1.3 percent, rebounding from a 2.8 percent contraction in Q1. Meantime, exports climbed 2.3 percent (vs -3.2 percent in Q1) and imports 3.0 percent (vs -3.4 percent).

On an annual basis, the economy expanded 2.1 percent year-on-year, faster than a 1.7 percent growth in the previous quarter and beating market expectations of 2.0 percent.




Thursday July 25 2019
South Korea Economy Expands 2.1% YoY in Q2
Bank of Korea | Mario | mario@tradingeconomics.com

The South Korean economy advanced 2.1 percent year-on-year in the three months to June 2019, following a 1.7 percent expansion in the previous quarter and beating market expectations of 2.0 percent, preliminary data showed. Growth was mainly boosted by utilities, manufacturing and services.

On the production side, growth was driven by utilities (10.8 percent vs 6.8 percent in Q1); manufacturing (1.5 percent vs 1.3 percent); and services (2.5 percent vs 2.3 percent). In addition, construction output shrank less (-3.8 percent vs -7.0 percent). Meanwhile, agriculture, forestry and fishing output growth slowed (0.3 percent vs 1.6 percent). 

On the expenditure side, final consumption rose 3.4 percent, faster than a 2.8 percent expansion in the previous quarter, as both government expenditure (7.3 percent vs 5.5 percent) and private spending (2.0 percent vs 1.9 percent) advanced further. Gross fixed capital formation declined 3.6 percent after shrinking 8.6 percent in the first quarter of the year. Meantime, exports expanded 1.5 percent (vs -0.2 percent in Q1) and imports edged up 0.1 percent (vs -5.1 percent in Q1).

On a quarterly basis, the GDP expanded 1.1 percent, rebounding from a 0.4 percent contraction in the prior quarter and above market forecasts of 1.0 percent.




Thursday July 18 2019
South Korea Unexpectedly Cuts Key Rate by 25 Bps to 1.5%
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea unexpectedly lowered its base rate by 25 basis points to 1.5 percent on July 18th 2019. This was the first adjustment in benchmark rate since November last year and the bank's first rate cut in three years, amid efforts to spur economic growth on the back rising global uncertainties following trade dispute with Japan and tariff war between US and China.

Policymakers also revised lower 2019 GDP growth outlook to 2.2 percent from an earlier estimate of 2.5 percent, mentioning weak demand at home and abroad and a delayed recovery in the global IT sector. In the first half of the year, the economy is expected to grow by 1.9 percent and by 2.4 percent in the second half. Meanwhile, 2019 inflation rate is estimated to be at 0.7 percent, below an earlier projection of 1.1 percent.

Excerpts from the statement by the Bank of Korea:

The board sees global economic growth and the global financial markets as likely to be affected by factors such as the degree of the spread of trade protectionism, the changes in the monetary policies of major countries, and geopolitical risks.

The board judges that the pace of domestic economic growth has slowed as construction investment has continued undergoing an adjustment and the slowdowns in exports and facilities investment have deepened, although consumption has continued to grow moderately. Employment conditions have partially improved, with the increase in the number of persons employed having risen. With respect to future domestic economic growth, the Board expects that the adjustment in construction investment will continue and exports and facilities investment will recover later than originally expected, although consumption will continue to grow. GDP is forecast to grow at the lower-2 percent level this year, below the April forecast (2.5 percent).

Consumer price inflation has remained low at the mid- to upper-0 percent level, in consequence mainly of the continued decline in petroleum product prices. Core inflation (with food and energy product prices excluded from the CPI) has been at the mid- to upper-0 percent range, and the rate of inflation expected by the general public has been at the low-2 percent level. Looking ahead, it is forecast that consumer price inflation will fall short of the path projected in April and fluctuate for some time below 1 percent and then run at the low- to mid-1 percent level from next year. Core inflation will also gradually rise.

The volatility of price variables in the domestic financial markets has increased. Long-term market interest rates have fallen significantly, in line mainly with concerns about economic slowdowns at home and abroad. Stock prices and the Korean won-US dollar exchange rate have fluctuated considerably, mainly affected by the US-China trade dispute and Japan’s export restrictions. The rate of increase in household lending has continued to slow, while housing prices have continued their downtrend.

Looking ahead, the board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability. As it is expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the board will maintain its accommodative monetary policy stance. In this process it will carefully monitor developments such as the US-China trade dispute, Japan’s export restrictions, any changes in the economies and monetary policies of major countries, the trend of increase in household debt, and geopolitical risks, while examining their effects on domestic growth and inflation.




Tuesday July 02 2019
South Korea Annual Inflation Rate Steady at 0.7% in June
Statistics Korea l Rida Husna | rida@tradingeconomics.com

South Korea's annual inflation rate was unchanged at 0.7 percent in June 2019, below market expectations of a 1.0 percent increase. A faster rise in prices of both food and housing offset a further drop in transport cost.

Inflation was steady for both restaurant & hotels (at 1.8 percent, the same as in May) and education (at 1.1 percent), while prices rose further for food and non-alcoholic beverages (2 percent vs 1.9 percent in May); housing & utilities (1.2 percent vs 1.1 percent); furnishing, household equipment & routine maintenance (1.7 percent vs 1.5 percent); and alcoholic beverages & tobacco (0.9 percent vs 0.7 percent). Also, cost of health increased (0.1 percent vs flat reading) and prices fell less for recreation & culture (-0.1 percent vs -1 percent) and clothing & footwear (-0.1 percent vs -0.2 percent). On the other hand, cost of miscellaneous goods & services slowed (1.5 percent vs 1.9 percent) and prices dropped at a faster pace for transport (-1 percent vs -0.6 percent) and communication (-2.8 percent vs -2.7 percent). 

For 2019, the Bank of Korea targets inflation rate to be at 2 percent.

Core CPI, which excludes oil and agricultural products, advanced 0.7 percent year-on-year in June, following a 0.6 percent gain in May. 

On a monthly basis, consumer prices fell unexpectedly by 0.2 percent in June, the first monthly drop in three months, following a 0.2 percent gain in May and missing forecasts of a 0.1 percent rise.


Monday July 01 2019
South Korea Trade Surplus Narrows Sharply in June
Ministry of Trade, Industry & Energy (MOTIE) l Chusnul Ch Manan | chusnul@tradingeconomics.com

South Korea’s trade surplus narrowed to USD 4.17 billion in June 2019 from USD 6.08 billion in the same month a year earlier, a preliminary data showed, as exports fell more than imports.

Year on-year exports tumbled by 13.5 pct year-on-year to USD 44.18 billion in June 2019, worse than market consensus of a 12 pct drop and faster than a 9.4 pct fall in May. It marked the seventh straight month of contraction in overseas sales, amid weakening global demand and the prolonged Sino-US trade row. Sales of semiconductors tumbled 25.5 pct, due to a fall in prices of memory chips, coupled with the weaker demand for smartphone around the world. In addition, exports of petrochemicals shrank 24.5 percent, mailny due to the decreasing of oil prices. On the other hand, sales of ships surged 46.4 percent. Also, exports of cars rose 8.1 percent, following the stronger demand for SUVs. Meantime, exports bio-health and rechargeable batteries also increased.

Exports to China, the largest trading partner for Asia's fourth-largest economy, slumped 24.1 percent, the steepest yearly fall since May 2009, when exports dropped by 25.6 percent Also, sales to the EU declined 3.1 percent, due to the sluggish economy of Germany. In addition, outbound shipments to the US decreased 2.5 percent, led by lower sales of chips and mobile devices

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 by 11.1 percent year-on-year to USD 40.01 billion in June 2019, accelerating from a marginally revised 1.8 percent fall in the previous month and compared with market consensus of a 10.1 percent decline.
 
For the first half of the year, the trade surplus narrowed sharply to USD 19.5 billion from USD 37.2 billion in the corresponding period 2018. Exports fell 8.4 percent on year to USD 271.5 billion while imports declined at a softer 5.1 percent to USD 252 billion.   
 



Tuesday June 04 2019
South Korea Inflation Rate Hits 4-Month High
Statistics Korea l Rida Husna | rida@tradingeconomics.com

South Korea's annual inflation rate inched higher to 0.7 percent in May of 2019 from 0.6 percent in the previous month while market had expected 0.8 percent. It was the highest inflation rate since January, as prices rose faster for both food and housing, while transport cost declined much less.

Year-on-year, prices of food and non-alcoholic beverages increased by 1.9 percent in May, accelerating from a 1.4 percent rise in April and marking the highest food inflation in four months. In addition, cost rose faster for: housing & utilities (1.1 percent vs 1 percent in April), education (1.1 percent vs 1 percent), miscellaneous goods & services (1.9 percent vs 1.5 percent); and alcoholic beverages & tobacco (0.7 percent vs 0.1 percent); while was unchanged for the second straight month for health. At the same time, cost of transport dropped much slower (-0.6 percent vs -1.9 percent). In contrast, prices slowed for both restaurant & hotels (1.8 percent vs 1.9 percent); and furnishing, household equipment & routine maintenance (1.5 percent vs 3.3 percent). Additionally, cost fell further for recreation & culture (-1 percent vs -0.4 percent), clothing & footwear (-0.2 percent, the same as in April), and communication (-2.7 percent vs -2.6 percent). 

For 2019, the Bank of Korea targets inflation rate to be at 2 percent.

Core CPI, which excludes oil and agricultural products, advanced 0.6 percent year-on-year in May, following a 0.7 percent gain in April. It marked the lowest figure since December 1999.

On a monthly basis, consumer prices increased by 0.2 percent in May, following a 0.4 percent gain in April and below forecasts of a 0.3 percent rise.


Tuesday June 04 2019
South Korea Q1 GDP Falls More than Initially Estimated
Bank of Korea | Mario | mario@tradingeconomics.com

South Korea’s GDP declined 0.4 percent on quarter in the first three months of 2019, down from the advanced estimate and market expectations of 0.3 percent and compared to a downwardly revised 0.9 percent expansion in the previous period. This was the slowest growth rate since Q4 2008. On the production side, GDP was dragged by contractions in manufacturing and construction. On the expenditure side, trade and gross fixed capital formation were the main draggers.

On the production side, output contracted sharply for manufacturing by 3.3 percent after a 1.6 percent climb in the previous three months, mainly due to lower production of computer & electronic & optical equipment. Also, construction fell 1.0 percent after a 0.8 percent advance in Q4, amid decreased residential building construction. Meantime, utilities remained unchanged following a 2.5 percent expansion. In contrast, services grew 0.8 percent after 0.5 percent growth, led by information & communication and finance & insurance.

On the expenditure side, final consumption went up 0.2 percent, easing from a 1.3 percent growth in Q4 2018, as both private (+0.1 percent vs +0.8 percent) and public spending (+0.4 percent vs +2.8 percent) slowed. Additionally, gross fixed capital formation plummeted 2.8 percent, after growing 1.9 percent in the previous quarter, mainly dragged by a 9.1 percent plunge in facilities. Meantime, exports declined 3.2 percent (vs -1.4 percent), amid lower sales of electrical and electrical equipment such as LCDs and semiconductors; and imports decreased 3.4 percent (vs 1.6 percent), as purchases fell for machinery & equipment and coal and petroleum products.

On an annual basis, the economy advanced 1.7 percent year-on-year, decelerating from a downwardly revised 2.9 percent growth in the previous quarter. It was the weakest growth rate since the third quarter of 2009.

The base year for the GDP data was changed to 2015 from 2010.



Tuesday June 04 2019
South Korea Annual GDP Growth Weakest Since 2009
Bank of Korea | Mario | mario@tradingeconomics.com

The South Korean economy expanded 1.7 percent year-on-year in the three months to March 2019, easing from a downwardly revised 2.9 percent growth in the previous quarter (vs original 3.1 percent) and compared to the original estimate and market expectations of 1.8 percent, final data showed. It was the weakest growth rate since the third quarter of 2009, amid a slowdown in manufacturing and a sharp contraction in construction.

On the production side, manufacturing (1.3 percent vs 5.6 percent in Q4) and services (2.3 percent vs 2.7 percent) lost steam. In addition, the construction sector plummeted 7.0 after shrinking 5.2 percent in the previous quarter. In contrast, primary activity grew 1.6 percent, compared to 0.4 percent and utilities expanded by 6.8 percent after a 5.1 percent rise.

On the expenditure side, final consumption expenditure grew 2.8 percent after a 3.6 percent expansion in the last quarter of 2018, as private consumption growth slowed to 1.9 percent from 2.4 percent, and government spending growth moderated to 5.5 percent after a 7.1 percent jump. In addition, gross fixed capital formation plummeted 8.6 percent after dropping 4.2 percent in Q4, with facilities plunging 17.4 percent (vs -5.3 percent). Meantime, exports edged down 0.2 percent (vs +6.7 percent) and imports fell 5.1 percent (vs +2.4 percent). 

On a quarterly basis, GDP shrank 0.4 percent on quarter, down from the advanced estimate and market expectations of a 0.3 percent contraction and compared to a downwardly revised 0.9 percent expansion in the previous period.

The base year for the GDP data was changed to 2015 from 2010.