SEOUL (BLOOMBERG) – South Korea’s early trade data show exports are set to slow this month as fewer working days and headwinds from an outbreak of the Delta variant weighed on the pace of growth.
Exports rose 22.9 per cent in the first 20 days this month from a year earlier, down from 41 per cent in August’s preliminary report, data from the customs office showed on Thursday (Sept 23). Still, average daily shipments gained 31.3 per cent during the period when taking into account one less business day than last year, in line with the pace last month.
South Korea’s trade data is an early indicator of global economic activity, as its manufacturers are positioned widely across supply chains. Exports have rallied this year as the world economy gradually recovered from the coronavirus pandemic, but the fast-spreading Delta strain has clouded the outlook by causing shutdowns in factories and ports that are crucial in keeping goods flowing across borders.
Manufacturing activity in China – the largest trade partner for South Korea and many other economies – slowed in the latest report, fuelling concerns about the strength of the global recovery.
“Export momentum remains largely unchanged even though there’s a bit of a slowdown in semiconductors due to China’s tightening of regulations on big tech firms and the delta variant,” said HI Investment & Securities economist Park Sang-hyun. “The lockdown in Vietnam also seems to be causing delays in supply chains and the risk of an economic slowdown in China is going to matter for exports in the fourth quarter.”
South Korea’s export data for the full month of September may also be affected by the national Chuseok holiday, which ran from Sept 20 to Sept 22 this year, as opposed to early October last year.
Thursday’s report showed exports to China rose 19.7 per cent between Sept 1 to Sept 20 from a year earlier; shipments to the United States advanced 24.9 per cent; those to the European Union increased 34.2 per cent; and to Japan rose 33.6 per cent.
Overall semiconductor shipments advanced 7.7 per cent. Exports of cars rose 9.4 per cent, while oil products increased 95 per cent. Sales of wireless communications devices rose 19.6 per cent.
South Korea’s overall imports increased 38.8 per cent in the first 20 days this month.