Korea’s Exports Set to Slow in September, Early Data Show

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South Korea’s early trade data show exports are set to slow in September as fewer working days and headwinds from an outbreak of the delta variant weighed on the pace of growth.  

Exports rose 22.9% in the first 20 days of September from a year earlier, down from 41% in August’s preliminary report, data from the customs office showed Thursday. Still, average daily shipments gained 31.3% during the period when taking into account one less business day than last year, in line with the pace in August.

Korea’s trade data is an early indicator of global economic activity as its manufacturers are positioned widely across supply chains. Exports have rallied this year as the world economy gradually recovered from the pandemic, but the fast-spreading delta strain has clouded the outlook by causing shutdowns in factories and ports that are crucial in keeping goods flowing across borders.

Manufacturing activity in China -- the largest trade partner for Korea and many other economies -- slowed in the latest report, fueling concerns about the strength of the global recovery.

“Export momentum remains largely unchanged even though there’s a bit of a slowdown in semiconductors due to China’s tightening of regulations on big tech firms and the delta variant,” Park Sang-hyun, an economist at HI Investment & Securities, said. “The lockdown in Vietnam also seems to be causing delays in supply chains and the risk of an economic slowdown in China is going to matter for exports in the fourth quarter.”

Korea’s export data for the full month of September may also be affected by the national Chuseok holiday, which ran from Sept. 20 to 22 this year, as opposed to early October last year. 

Thursday’s report showed exports to China rose 19.7% between Sept. 1-20 from a year earlier; shipments to the U.S. advanced 24.9%; those to the European Union increased 34.2%; and to Japan rose 33.6%.

Overall semiconductor shipments advanced 7.7%. Exports of cars rose 9.4%, while oil products increased 95%. Sales of wireless communications devices rose 19.6%.

Korea’s overall imports increased 38.8% in the first 20 days of September.

©2021 Bloomberg L.P.