South Korean exports contract in US-China trade dispute

Jakarta -South Korea’s export performance slightly contracted in June 2018. This adds to concerns about the economic health of the Ginseng Country.

South Korea’s trade ministry said on Sunday its exports fell 0.1% from the same period a year earlier. This realization is smaller than the 2.2% forecast for a Bloomberg survey of economists.

Meanwhile, imports increased 10.7% in June 2018. Thus, the trade surplus was recorded at US $ 6.32 billion.

South Korea’s exports to China rose 29.8 percent in June 2018 from the same period a year earlier, while exports to the US and Japan grew 7.6 percent and 11.1 percent, respectively. Semiconductor exports rose 39 percent and automotive exports fell 9.9 percent.

“The decline in exports is partly due to fewer working days and the basic effects of large-scale ship exports a year earlier,” the ministry said in a statement.

South Korea is one of the first large-scale economies to report trade data and be regarded as a determinant of the direction of global demand. The country’s economic growth has been boosted by exports this year, on the contrary, domestic demand appears less enthusiastic.

Trading data will be scrutinized by analysts seeking clues on the timing of the next rate hike by the Bank of Korea (BoK), which is currently at the 1.5% level.

Although South Korea’s central bank has indicated that the next monetary policy move is likely to be a rise in interest rates, job growth and an exports melening into its own burden.

Meanwhile, the threat of tariffs and counter tariffs from the US following a reply from China will drag and harm South Korea. South Korea is known to be a major exporter of parts and components for Chinese factories.

Twenty-five per cent of South Korea’s total exports are made to China, of which 78.5 per cent are intermediate goods. The South Korean Trade Promotion Board estimates that at least 10% of these items end up in products sold in the US.

The South Korean Ministry of Trade also claimed to have submitted a letter to the US Government containing its rejection of the car import tariff under consideration by the administration of US President Donald Trump.

During a meeting with lawmakers and industry officials in the United States last week, South Korean Trade Minister Paik Un-gyu said the tariff would harm the competitiveness of the US auto industry, which relies on global supply chains.