South Korea Exports Rebound as Chip Shipments Hit Record

(Bloomberg) -- South Korea’s exports rebounded in May following a surprise contraction in April as shipments of semiconductors hit a record high, a positive sign for global growth.

Exports rose 13.5 percent in May from a year earlier, while imports jumped 12.6 percent, leaving a trade surplus of $6.73 billion. South Korea releases its trade data earlier than most other major economies, making it a bellwether of global demand.

The results topped expectations after a stretch of downbeat data had raised concerns about the health of the nation’s economic recovery. Bank of Korea Governor Lee Ju-yeol last week cited rising uncertainties for the central bank’s decision to keep its benchmark interest rate unchanged.

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Semiconductor shipments, which dominate South Korea’s exports, rose 45 percent in May to a record $10.9 billion, perhaps easing concerns about a slowdown in the technology cycle. Data released on Thursday showed the nation’s semiconductor output drove industrial production to a better-than-expected 3.4 percent increase in April from the previous month.

"The export growth rate may fluctuate going forward, depending on base effects from last year’s monthly data, but I expect overall export values to remain good," said An Ki-tae, an economist for NH Investment & Securities in Seoul. "Even after excluding semiconductors, other sectors like petroleum products and machinery are rising."

Growing trade protectionism and a slowdown in emerging economies are risks to the positive outlook, the trade ministry said. While Korea managed to renegotiate its trade agreement with the U.S. without any significant harm to its position, the Trump administration continues to lash out at its closest allies with tariffs.

Shipments of petroleum products rose 38 percent and those of computers rose 29 percent.

Exports to China jumped 30 percent to $13.9 billion, the second-highest monthly total on record. Those to the U.S. rose 12 percent, while shipments to Japan jumped 16 percent. The trade ministry cited upbeat manufacturing activity in major economies, higher prices for oil and other major products, and a positive tech cycle.

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