South Korean exports grew the most in 15 months in April as demand from the United States firmed, reinforcing recent signs that a recovery in global consumption was gathering pace although China remained a worry.
South Korea is the world’s seventh-largest exporter and the first major economy to report trade figures each month, providing an early glimpse into the health of global demand for products ranging from smartphones and TVs to cars and ships.
Data from the trade ministry on Thursday showed exports from Asia’s fourth-largest economy grew 9.0 percent in April from a year earlier to $50.32 billion while imports rose 5.0 percent to $45.85 billion, easily topping expectations.
Export growth was the strongest since a 10.9 percent annual rise in January 2013, with shipments to the United States up a sharp 19.3 percent on-year, suggesting South Korea’s second-biggest market is set for a rebound despite a shockingly weak first quarter GDP report
“U.S. GDP growth in the first quarter was a shock but exports to the U.S. will be firm as second-quarter growth is expected to be good based on the consensus views,” said Park Sang-hyun, chief economist at HI Investment & Securities.
Thursday’s strong trade data boosted the trade surplus to $4.46 billion from $4.17 billion in March, the 27th consecutive month the accounts have been in the black.
The shipments support recent evidence suggesting that Asia’s export-reliant economies are beginning to benefit from a recovery in advanced countries, led by the U.S, boding well for global heavyweights such as South Korea’s Samsung Electronics and car maker Hyundai Motor Co.
March shipments from Taiwan, a bellwether for global growth and tech demand, also showed a surge to both the United States and Europe.
Separate government data released showed South Korea’s annual consumer price inflation sped up to an eight-month high in April, underscoring a broadening recovery in the economy.
Still, analysts noted that a slowdown in China, South Korea’s biggest export market, poses some uncertainty.
“It’s (April trade) good for the growth outlook but markets will be cautious on the sustainability (of exports) because of China,” said Ronald Man, economist at HSBC based in Hong Kong.
While South Korean exports of automobiles, oil products, steel products, mobile phones and semiconductors to the U.S. jumped in April, sales to China slowed to an annual pace of 2.4 percent in April from 4.4 percent in March.
“The sustainability of the strong growth (in exports) is somewhat questionable if (growth in) shipments to China is 2.4 percent,” Man said.
China’s government statistics agency said on Thursday the country’s official Purchasing Managers’ Index edged up to 50.4 in April from 50.3 in March, but a touch below the market’s expectation for 50.5.
The PMI came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures taken over the past month on concerns that the economy may be losing momentum more quickly than expected.
Nonetheless, the uncertainty over China’s economic outlook, which has rattled markets recently, has partly been overcome by gains shown in advanced economies. The International Monetary Fund said last month that an increase in output in richer nations will spur the global recovery.
South Korea’s economy grew 0.9 percent in the first quarter from the fourth, led by stronger exports and construction spending. The Bank of Korea expects growth of 4.0 percent this year, from 3.0 percent last year. [ID: nL3N0NF069]
The BOK’s optimism was underlined by the 1.5 percent on-year rise in the consumer price index for April, the fastest since a matching increase seen in August last year and bang in line with expectations in a Reuters survey.
It was below the central bank’s target band of between 2.5 percent and 3.5 percent, but the accelerating inflation supports the market’s view that the bank’s next move would be to raise interest rates, probably in the second half of this year.
The Bank of Korea last altered the policy rate in May last year, when it cut it by 25 basis points to 2.50 percent. (Reuters)