South Korean early exports post double-digit gains on chips, cars

Bloomberg

South Korea’s exports are set for another monthly gain in March, adding to signs the global economic recovery is taking hold as vaccinations pick up.
Exports rise 12.5% in the first 20 days of the month from a year earlier, the customs office reported on Monday, with chips and cars leading the gains. Average daily shipments increased 16.1% during the period, which had half a business day less compared with last year.
The report offers further evidence that global trade is on track for a strong rebound this year as vaccinations boost confidence among businesses and consumers. With its companies embedded in global supply chains, Korea is poised to benefit from a broadening global recovery.
Rising memory-chip prices amid a supply-demand mismatch may also shore up earnings at Korea’s top exporters such as Samsung Electronics Co. and SK Hynix Inc. Chip exports increased 13.6% so far in March, customs data showed.
“Korea’s external sector looks to have had its strongest quarter since 2018 and with semiconductor demand set to remain elevated in the short term, exports are likely to continue to provide an important boost to gross domestic product growth,” Alex Holmes, an economist at Capital Economics, wrote in a note.
While optimism runs high, the trade outlook remains uncertain. Overall export gains so far this month were strong, but slower than in February when the value of daily shipments jumped 26.4%.
The virus is still rampant in many countries, with France deciding to lock down several regions including the Paris area. Trade tensions between the US and China are a persistent risk.
Exports to China, Korea’s largest overseas market, gained 23.4% between March 1-20 from a year earlier. Exports to the US rise 7.4%, while shipments to the European Union jumped 37.5% and those to Japan dropped 10.7%.
Total overseas shipments of cars gained 13%, while oil products increased 12.4%. Sales of home appliances were down 9.3%.
Overall imports rose 16.3% in the first 20 days of March.
“Any weakness going forward may stem from some lockdowns in Europe,” said Park Chong-hoon, an economist at Standard Chartered Bank in Seoul. “South Korea’s exports still appear solid and will likely continue favorably. They could also gain from U.S. fiscal stimulus and China’s ongoing economic rebound.”