Canary nearing the bottom? South Korea's export decline narrows for the first time in 16 months, recording a trade surplus.
South Korea's exports in June fell by 6% compared to the same period last year, marking the ninth consecutive month of decline. However, the decline was lower than the expected 3.6% and showed a narrower decrease compared to the 15.2% drop in May. This decline is the second smallest since October last year when exports entered a sluggish phase.
In June, South Korea recorded its first trade surplus in 16 months, driven by strong growth in automobile exports and a decline in energy imports.
Data released by Japan's Ministry of Economy, Trade, and Industry on Saturday showed that South Korea's exports in June decreased by 6% compared to the same period last year, marking the ninth consecutive month of decline. However, the decline was smaller than the expected 3.6% and narrower than the 15.2% decline in May, making it the second smallest decline since entering a period of export slump in October last year.
In June, South Korea's imports decreased by 11.7% compared to the same period last year, with the previous value being a 14% decline. This resulted in a trade surplus of $1.1 billion, the first since February 2022.
South Korea's exports serve as a barometer of international trade, with the country exporting products such as chips, displays, and refined oil. These data provide the latest signal that the decline in demand for South Korean goods is easing.
According to Bloomberg, Moon Junghiu, an economist at the Bank of Korea, stated before the data was released:
"The decline in exports may have bottomed out, but from now on, the more important question is whether the recovery will be V-shaped or L-shaped."
The Ministry of Trade, Industry, and Energy of South Korea stated that due to seasonal factors, the improvement in trade balance may pause in July and August, but it is expected to return to track with export growth.
In June, South Korea's automobile exports grew by 58.3%, marking the 12th consecutive month of growth. Ship exports increased by 98.6%, while petroleum product exports declined by 41%.
Exports to China decreased by 19%, the smallest decline since October last year. Exports to the United States declined by 1.9%, marking the third consecutive month of decline, while exports to the European Union increased by 9.2%.
In June, South Korea's semiconductor exports declined by 28%, the smallest decline in eight months, compared to a 36% decline in May.
Despite the improvement, there is still lingering uncertainty about when the chip industry, which is the main driver of South Korea's economic growth, will rebound.