Exports Decreased for the First Time in a Month, Imports Fell Further... July Surplus Still 'Recession-Type' (Comprehensive)

July 1-10 Exports Down $2.3 Billion YoY
Trade Volume with China and the US Both Decrease
Need to Foster 'Second Semiconductor' and Diversify Export Markets

Exports from the 1st to the 10th of this month decreased by 14.8% compared to the same period last year. Although exports from the 1st to the 10th of last month increased by 1.2%, marking a positive growth for the first time in four months, they showed a decline again after just one month. With both exports and imports to the largest trading partners, China and the United States, decreasing, even if a trade surplus continues this month following last month, it seems inevitable to label it as a 'recession-type surplus.'

On the 11th, the Korea Customs Service announced that exports from July 1 to 10 this year amounted to $13.3 billion, down 14.8% ($2.3 billion) from the same period last year. Imports were $15.5 billion, down 26.9% ($5.7 billion).

Including this, the cumulative annual exports totaled $320.4 billion, a 12.5% ($45.6 billion) decrease compared to the same period last year. Imports were $349.2 billion, down 8.8% ($33.5 billion).

The trade balance showed a deficit of $2.276 billion. The cumulative deficit reached $28.747 billion, an increase of $12.141 billion compared to $16.6 billion in the same period last year.

Up to the 10th of this month, the number of working days was seven, the same as last year. Considering the number of working days, the average daily export value was $1.9 billion, down 14.8% from $2.22 billion in the same period last year.

Looking at exports by item from the 1st to the 10th of this month, passenger cars (25.2%) and ships (74.0%) increased compared to the same period last year. On the other hand, semiconductors (-36.8%), petroleum products (-51.3%), and wireless communication devices (-27.1%) decreased. Imports increased for wireless communication devices (48.1%) compared to the same period last year, but decreased for crude oil (-55.2%), semiconductors (-23.8%), gas (-32.2%), and semiconductor manufacturing equipment (-14.7%).

By country, exports and imports to the United States and China, which account for the largest share of South Korea's trade, both decreased. Exports increased to the European Union (EU, 22.4%) and India (11.1%), but decreased to China (-20.6%), the United States (-9%), and Vietnam (-32.5%). Imports increased from Vietnam (13.7%) and Malaysia (6.1%), but decreased from China (-16.8%), the United States (-17.5%), and the European Union (-5.9%).

The government still maintains a 'low in the beginning, high in the end' outlook. On the 5th, Lee Chang-yang, Minister of Trade, Industry and Energy, forecasted that the export growth rate would turn positive compared to the same period last year toward the end of the year. Minister Lee added, "China's economic recovery has not fully materialized, and the semiconductor sector has not yet fully recovered," but he also said, "By the end of the year, the export growth rate is expected to improve, and the trade balance is likely to remain in surplus after September."

This outlook follows last month's trade surplus of $1.13 billion, which ended a 15-month streak of trade deficits since March last year (-$20 million). Experts note that the surplus may continue this month due to falling energy prices but caution against complacency just because the difference between export and import values shows a surplus. This is a recession-type surplus caused by simultaneous declines in both imports and exports. However, Minister Lee dismissed such concerns, stating, "A recession-type surplus generally refers to when economic growth is negative for two consecutive quarters," and added, "Our economy is currently showing a high growth rate of 1%."

Professor Seok Byung-hoon of Ewha Womans University’s Department of Economics said, "The reason for South Korea's current export slump is the excessive dependence on a single item, semiconductors, and a single country, China," adding, "It still appears that the economy is in a recession or slowdown phase, officially below the potential growth rate." He further explained, "The government's active efforts to develop various markets, such as fostering a 'second semiconductor' industry and dispatching shuttle economic cooperation teams, are positive in the long term, but it does not seem enough to predict a rebound in the second half of the year."

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.