S. Korea Trade Surplus Hits Unexpected Record as Exports JumpCynthia Kim
South Korea posted a record trade surplus in October as demand from the U.S. boosted exports of products such as steel pipes and computers.
The $7.5 billion surplus was the highest for any month, the trade ministry said in an e-mailed statement today, and was was $2.5 billion more than the median estimate in a survey of economists by Bloomberg News. Exports rose 2.5 percent from a year earlier, while imports dropped 3 percent.
The unexpectedly strong trade performance could further boost economic growth, which accelerated in the second quarter on stronger consumption, and fiscal and monetary stimulus. The Bank of Japan’s expanded easing poses a risk to this, as a weak yen may make Japanese products cheaper.
“U.S. demand for Korean goods is solid, especially before the holiday season. We may continue to see growth in exports until the end of this year,” Yoon Yeo Sam, economist at KDB Daewoo Securities, said in Seoul after the data, adding that the yen’s fall after the Bank of Japan’s surprise expansion of monetary easing is a risk for Korea’s exports.
The record surplus was driven by a jump in exports to the U.S., which climbed 25 percent from a year earlier. Shipments to China, S. Korea’s biggest trading partner, rose 3.7 percent, while those to Japan dropped 1.4 percent.
Exports of ships surged 35 percent from a year ago, while shipments of computers were up 15 percent and semiconductors rose 12 percent. November exports may be another record high should the current pace continue, the trade ministry said.
Finance minister Choi Kyung Hwan said yesterday that a divergence in monetary policies between the U.S. and Japan is a risk for Asia’s fourth-largest economy as volatility in the currency market could impede economic expansion. The Bank of Japan yesterday announced it will boost monetary stimulus program and the U.S. Federal Reserve this week announced an end to quantitative easing.
“If the yen continues to weaken, this will pose further downside risks to Korea’s exports,” Ronald Man of HSBC Holdings Plc in Hong Kong wrote in a note yesterday. “Lower export growth will weaken Korea’s economic outlook.”
The won fell 1.2 percent to close at 1,068.82 per dollar in Seoul yesterday, the biggest decline since June 2013, according to prices compiled by Bloomberg.