S. Korea’s July exports set for strongest gain in 26-month – poll

South Korea’s exports are expected to surge in July, marking the fastest pace of growth in 26 months, according to a Reuters poll released on Tuesday.

The robust performance is attributed to continued strength in computer chip sales, driven by buoyant demand in the United States and a recovering Chinese market.

Economists surveyed predicted an 18.4 per cent year-on-year increase in exports for July, a significant acceleration from the 5.1 per cent growth recorded in June. This would be the highest export growth rate since May 2022.

The country has enjoyed consistent export growth since October, primarily driven by semiconductor sales and strong shipments to the US, fuelled by the growing artificial intelligence (AI) market.

This positive momentum is anticipated to continue in July, with increased sales of automobiles and exports to China contributing to the overall growth. Additionally, favourable calendar effects are expected to boost the export figures.

“While exports of IT products, such as semiconductors and computers, continue to grow, there will also be positive signs seen in sales of automobiles and automobile parts,” said Stephen Lee, chief economist at Meritz Securities.

Preliminary data for the first 20 days of July revealed an 18.8 per cent increase in exports, with semiconductor shipments soaring by 57.5 per cent. Exports to the US rose 13.4 per cent, while those to China jumped 20.4 per cent.

The strong export performance is expected to be a key factor in driving overall economic growth in the second half of the year, following a contraction in the trade-reliant economy during the Q2.

However, some economists caution that the peak in export growth may have already been reached.

Imports are also projected to rise sharply, with a 13.4 per cent year-on-year increase forecast for July. Despite this, the country is expected to maintain a trade surplus for the 14th consecutive month, with an estimated surplus of $5 billion.

South Korea will officially release its July trade data on Thursday, August 1.

Attribution: Reuters