South Korea’s early exports point to an incipient global recovery Ship’s crew

(Bloomberg) –

South Korean exports offered a first sign of improvement in global trade after rising year-on-year for the first time since last summer.

Preliminary trade numbers showed exports rose 5.3% in the first 20 days of June from a year earlier. This is the first rise since August, a possible sign that the slowdown in global demand is beginning to ease. Most of the increase was due to gains in auto and marine exports, while semiconductor exports continued to decline.

As a key supplier of chips and smartphones to the global economy, South Korea’s export data offers one of the earliest momentum checks on the strength of international trade and demand in the technology sector.

While the numbers are encouraging, it’s still too early to tell how quickly a recovery might happen, said Krystal Tan, an economist at the Australia and New Zealand Banking Group. “But it looks like we’re nearing a bottom.”

An improvement in the country’s supplies may be a leading indicator of the broader trend, although economists warn against drawing firm conclusions from an incomplete set of monthly figures.

“The data suggests that global trade may have bottomed out, but it remains to be seen whether there will be a full recovery,” said Moon Junghiu, an economist at KB Kookmin Bank in Seoul.

The gains were largely due to shipments to the US, stable demand for automobiles and an increase in marine-related demand. Exports to the EU and Hong Kong also increased year-on-year, but shipments to China fell again.

The results fit a picture of a US economy resilient despite a series of rate hikes, while China’s recovery remains disappointing, although policymakers there are stepping up stimulus measures to restore momentum. A full recovery in global trade hinges largely on China — a key engine of the global economy — and a resurgence in appetite for chips, which power everything from cars to electronics.

The figures should be “taken with a pinch of salt and can be viewed as a stabilization in US exports rather than an increase,” Tan said.

Despite the increase, overall exports are still around 18% below their 20-day peak in March 2022. A measurement of average daily exports, which removes potential distortions from changes in the number of working days, also showed that deliveries were not the case was as strong as indicated in the headline. The average declined 2%, although that was the smallest drop since exports started falling last year.

The 20-day data showed that auto exports more than doubled. Shipping-related demand, a factor that sometimes skews monthly numbers, also rose more than 100%.

While semiconductor exports declined 23.5%, the decline moderated compared to the figures for all of May. Total imports fell 11.2%, resulting in a trade deficit of $1.61 billion.

South Korean President Yoon Suk Yeol has supported Biden administration initiatives aimed at reducing dependence on China in global supply chains for essential materials such as semiconductors.

–Assisted by Jon Herskovitz.

© 2023 Bloomberg LP

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