South Korea Exports Climb to Record in 2017 on Semiconductors

(Bloomberg) -- South Korea’s exports in 2017 expanded to the highest level in at least six decades, boosted by shipments of semiconductors, machinery and petrochemicals, according to a statement from the trade ministry. Exports in December missed estimates.

Key Points

• Exports surged 15.8 percent to $574 billion in 2017 from a year earlier. The trade surplus widened to $96 billion from $89 billion in 2016
• Exports rose 8.9 percent in December from the same month a year earlier. The median estimate of economists was for a 9.8 percent increase
• Imports climbed 13 percent in December, compared with an estimate of 12 percent, leaving trade surplus of $5.8 billion
• Shipments of semiconductors jumped 57.4 percent to $98 billion in 2017

Big Picture

South Korea’s economy benefited from surging exports in 2017, which led to the Bank of Korea raising its benchmark interest rate in November for the first time since 2011. While the government expects the country’s economy to expand 3 percent in the new year, the BOK will "carefully decide" on whether monetary accommodation needs some adjustment.

The large trade surplus may continue to be an irritant for President Donald Trump, who has demanded better trade terms. South Korea is on the U.S. Treasury’s currency manipulation watch list, and in October it agreed to amend a free-trade deal with the U.S.

Details

• Global trade volume is expected to continue rising in 2018 as the global economy recovers and IT demand expands, South Korea’s trade ministry said in its statement
• Potential negatives include the strengthening of trade protectionism, a stronger won, rising interest rates and climbing oil prices
• The won is likely to trade at an average of 1,100.8 per dollar in 2018, the trade ministry said; it ended 2017 at 1,070.65
• Currency volatility may increase on trade protectionism, other countries’ monetary normalization and geopolitical risks
• Exports of semiconductors are expected to “slightly rise” going forward as investments in Internet of Things and big data increase amid short supply, the trade ministry said
• Shipments to China rose 14.2 percent in 2017 from a year earlier, while those to Japan grew 10.1 percent and to Vietnam surged 46.3 percent
• Exports to the U.S. increased 3.2 percent in 2017. The trade surplus with the U.S. narrowed to $18 billion compared with $23.3 billion a year earlier

To contact the reporter on this story: Hooyeon Kim in Seoul at hkim592@bloomberg.net.

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Philip Glamann, Jeff Kearns

©2018 Bloomberg L.P.