SEOUL (Reuters) - South Korean exports rose at a much faster-than-expected pace in April, surging for a sixth straight month helped by robust demand for high-tech memory chips and adding confirmation to perceptions of broad recovery in the global economy.
Exports to the United States rose in April but South Korea’s trade surplus with that country declined on an annual basis over the same period, Monday’s data showed, potentially easing concerns Washington may impose protectionist measures that could hurt South Korea’s economy - Asia’s fourth-largest.
U.S. President Donald Trump said last week in an interview with Reuters that he was seeking to change a free trade deal with South Korea or scrap it entirely.
Preliminary data showed April’s exports soared 24.2 percent from a year earlier to $51.01 billion, while imports surged 16.6 percent to $37.75 billion to create a $13.25 billion trade surplus, the Ministry of Trade, Industry and Energy said.
Exports rose at the fastest pace since August 2011 when they gained 25.5 percent.
Shipments to the United States rose 3.9 percent on-year in April, rebounding from a 5.0 percent fall in March, the official breakdown showed. South Korea’s trade surplus with the United States was $1.68 billion in April, down from $2.52 billion a year before.
Machinery, oil products and household electronics were the main drivers of exports to the United States last month.
“If this trend continues, South Korea will have likely escaped one of the criteria for currency manipulator designation,” said An Ki-tae, an economist at NH Investment & Securities, adding the trade surplus with the United States was likely to fall below $20 billion this year if it kept declining at the current tempo.
“The controversy over trade with the United States will probably fade at this rate,” he said.
A U.S. trade and customs enforcement law enacted last year set out three criteria for identifying manipulation among major trading partners: a “material” global current account surplus, a “significant” bilateral trade surplus with the United States, and persistent one-way intervention in foreign exchange markets.
South Korea is currently in the process of reducing its trade surplus with the United States, Finance Minister Yoo Il-ho said on Sunday.
Meanwhile, exports to China rose 10.2 percent on-year in April versus a 12.1 percent gain in March. Last month’s gain was thanks to the booming construction sector and capital expenditure in China, the data showed.
The trade ministry said it was aiming to diversify South Korea’s export destinations to reduce reliance on markets such as the United States and China, given persistent downside risks.
Overall, semiconductor chip and flat display panel exports boosted headline export performance in April, jumping 56.9 percent and 10.2 percent on-year respectively. Ship exports also lent a hand, soaring 102.9 percent.
With the general downturn in the shipbuilding industry, every ship delivery results in spikes in data, but even without the ship deliveries, exports would still have risen 16.8 percent on-year in April, the trade ministry said.
“It will be difficult for exports to maintain growth in the 20-percent range, we’ll likely see growth slow a bit in the second half of the year as the base effects subside from crude oil products which drove export growth in the first quarter,” said Park Sang-hyun, chief economist at HI Investment & Securities.
South Korean financial markets are closed on Monday for a public holiday.
The average export value per working day was $2.27 billion in April, compared to $2.04 billion in March, according to Reuters calculations.
Exports have been gaining since November last year, bolstering economic growth in the first quarter. Central bank data last week showed first-quarter gross domestic product growth was a faster-than-expected 0.9 percent, the quickest in three quarters.
Last week, the trade ministry upgraded its export outlook for the year to between 6 and 7 percent growth from 2.9 percent seen previously.
Reporting by Christine Kim and Cynthia Kim; Editing by Eric Meijer