SINGAPORE (ICIS)--South Korea’s export volumes of most major petrochemical items in January increased on a year-on-year basis, in line with spikes in value of its overall shipments abroad, with strong trade growth expected for the whole of 2018 on the back of a healthy global economy, according to analysts.
Out of 33 petrochemicals tracked by ICIS, 24 registered year-on-year growth in export volumes in January while the remaining nine posted declines, based on data from the Korea International Trade Association (KITA). (Please see interactive below for detailed figures)
By value, South Korea’s exports of petrochemicals in January rose by 18.4% year on year to $4.2bn “due to a rise in export prices caused by the oil price surge”, its Ministry of Trade, Industry and Entergy (MOTIE) said in an earlier statement.
Outbound shipments of pharmaceuticals jumped by 51.1% year on year to $245m in January, it said.
The country’s overall exports expanded by 22.2% year on year to $49.2bn last month, “posting an all-time January record high”, MOTIE said.
South Korea’s exports have now increased for 15 consecutive months, it said.
“This is the first double-digit rise in four months, led by shipments of semiconductors, machinery, and petrochemical products,” said Singapore-based OCBC Treasury Research.
Exports to China rose 24.5% year on year to $13.4bn in January, while those to ASEAN surged 37.2% to $8.3bn, according to MOTIE.
South Korea’s imports surged by 20.9% year on year to $45.5bn in January, resulting in a trade surplus of $3.7bn.
“Inbound shipments of semiconductor manufacturing machines and computer memory devices expanded due to increased domestic production and production facility investment, while those of crude oil and zinc ore grew because of a rise in oil and commodity prices,” MOTIE said.
South Korea’s external sector is expected to boost its economy significantly this year, according to Spain-based FocusEconomics.
“Tourism exports, for example, could get a boost from the PyeongChang Olympic Winter Games,” it said.
Moreover, warmer relations between the governments of South Korea and China could translate into more Chinese tourists visiting Korea this year, FocusEconomics said.
The PyeongChang Winter Olympics has led to an apparent warming in relations between North and South Korea, although it remains to be seen if this will translate into reduced geopolitical tension on the peninsula, it said.
“A healthy global economy should also support demand for Korean semiconductors, general machinery and petrochemicals,” the research firm added.
However, there are potential downsides to the external sector’s economic contribution, including a strong Korean won and more restrictive trade policies abroad, FocusEconomics said.
South Korea’s economy posted a 3.1% growth in 2017, higher than the 2.8% pace set in the previous year.
The economy is expected to be supported by increased government spending, a healthy global economy and a boost from the PyeongChang Winter Olympics this year, according to FocusEconomics.
However, recent government measures to tame housing prices and household debt could weigh on the economy’s short-term growth outlook, it said.
FocusEconomics expects South Korea's economy to post a 2.9% growth in 2018.
Picture: Shipping containers stacked at the port of Busan (Source: KPA/Zuma/Rex/Shutterstock)