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Korea’s July exports decrease 11% to $46.1 billion 2019-08-01

The Ministry of Trade, Industry and Energy announced on August 1 that Korea’s exports in July decreased 11.0 percent year-on-year to USD 46.1 billion. Imports also declined 2.7 percent to $43.7 billion, and the trade balance stood at a surplus of $2.4 billion, remaining positive for 90 straight months.
The decrease in exports was due to a mix of different factors: i) worsening external conditions such as the ongoing U.S.-China trade dispute and Japan’s export restrictions, ii) a slowdown in the semiconductor sector and falling chip prices, and iii) the petrochemical and petroleum product industries that are under pressure due to the stagnant recovery of oil prices. Meanwhile, it appears that Japan’s export restrictions had a limited impact on July exports.

July exports saw improvement compared to June exports, which had posted a year-on-year decrease of 13.7 percent. In terms of volume, exports last month gained 2.9 percent, and exports from January to July grew 0.8 percent compared to the same period last year.

By item, July shipments of semiconductors, petrochemicals, and petroleum products contracted, but those of automobiles, auto parts, and home appliances expanded.

Exports of semiconductors decreased 28.1 percent to $7.5 billion. DRAM and NAND prices continued to decline compared to last year despite recent temporary rebounds. Inventory adjustments at global companies also contributed to the contraction.

Those of petrochemicals moved down 12.4 percent to $3.8 billion due to falling oil prices and delayed purchases. In volume terms, however, exports increased after new local facilities went into operation.

The value of petroleum products shipped overseas totaled $3.5 billion, down 10.5 percent. This is on account of decreasing oil prices, fiercer competition, and the introduction of more refineries in Asia.

On the contrary, exports of automobiles advanced 21.6 percent to $3.8 billion thanks to increasing global demand for sport utility vehicles (SUVs) and eco-friendly vehicles.

Outbound shipments of auto parts moved up 1.9 percent to $2.1 billion, returning to growth after six months of contraction. The introduction of new models in the U.S., the EU, and Central and South America led to an expansion in parts exports.

Those of home appliances also climbed up 2.2 percent to $611 million on the back of robust sales of clothes dryers and air purifiers. More products were shipped to the U.S. and the Middle East. The increased domestic production also helped the growth.

Regionally, decreases were seen in exports to China and the U.S., but increases were experienced in shipments to the EU, the Association of Southeast Asian Nations (ASEAN), and the Commonwealth of Independent States (CIS).

Exports to China went down 16.3 percent to $11.5 billion largely due to lower demand for semiconductors, petrochemicals, general machinery, and displays.

Those to the U.S. inched down 0.7 percent to $6.1 billion, following decreased shipments of general machinery, wireless communications devices, semiconductors, and computers.

Shipments to the EU, on the other hand, edged up 0.3 percent to $4.6 billion as more automobiles, general machinery, and ships were delivered to Europe.

The value of Korean goods shipped to ASEAN totaled $8.2 billion, up 0.5 percent because of increased shipments of petroleum products, general machinery, wireless communications devices, and automobiles.

Exports to the CIS gained 14.5 percent to $1.2 billion on the back of improved sales of automobiles, general machinery, home appliances, and displays.

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