South Korea Exports Post Double-Digit Growth

South Korea’s exports posted double digit-growth for a sixth month in a row in June, overriding tepid manufacturing activity as normalizing global demand continued to boost sales of memory chips and petrochemical products.

Shipments surged 13.7% to $51.41 billion from a year earlier, while imports jumped a faster 18% to $40.01 billion, resulting in a trade surplus of $11.40 billion, government data showed on Saturday, Reuters reported.

Although June exports growth slightly missed a 17.1% expansion seen in a Reuters survey, double-digit growth for a sixth month in a row marks the longest stretch of expansion at such a pace since September 2011, an indication that the economy is gathering momentum.

“South Korea’s foreign trade is boosting the overall performance of the economy, thanks to increasing prices of memory chips and demand for petrochemical goods,” Park Sang-hyun, chief economist at HI Investment & Securities, said after the release.

“Risks ahead include sliding oil prices, which may slow shipment growth in the second half. We still need to see some stronger demand for consumer goods to be able to say that the overall growth is strong.”

The trade ministry expects exports to jump 10% this year, although uncertainties related to global oil prices and protectionist measures by the US could limit trade expansion.

Policymakers are cautiously watching Washington’s next move on the Korea-US Free Trade Agreement, after President Donald Trump told Reuters on April 28 that he will either renegotiate or terminate what he called a “horrible” deal.

Trump told South Korean President Moon Jae-in in Washington on Friday the United States was renegotiating a “rough” trade deal with South Korea.

In June, exports to the US slipped 1.1% on-year, while shipments to China and the EU rose by 5.1% and 21.1% respectively, the trade ministry data showed.

Of the nation’s 13 major exports items, 10 items, including semiconductors, shipbuilding and petrochemical goods, surged. Exports of semiconductors soared 52% in June on-year, while shipbuilding and petrochemical goods were up 43.2% and 15.6% each.

Imports surged for an eighth straight month, the longest stretch of growth since September 2014, signaling a rebound in domestic demand.

Imports of consumer goods posted mere 1.5% growth in June, lagging behind a 41.8% surge in imports of capital goods, including components needed in production of memory chips.

“Private consumption is improving, but at a much slower pace than external demand,” Park at HI Investment & Securities said.

South Korea’s industrial output barely gained in May after posting unexpected declines in April despite surging exports, as demand for consumer goods remained weak.