SEOUL • South Korea’s exports in 2017 expanded to the highest level in at least six decades, boosted by shipments of semiconductors, machinery and petrochemicals, according to a statement from the Trade Ministry. Exports in December missed estimates.
Exports surged 15.8% to US$574 billion (RM2.33 trillion) in 2017 from a year earlier. The trade surplus widened to US$96 billion from US$89 billion in 2016.
Exports rose 8.9% in December from the same month a year earlier. The median estimate of economists was for a 9.8% increase.
Imports climbed 13% in December, compared to an estimate of 12%, leaving a trade surplus of US$5.8 billion.
Shipments of semiconductors jumped 57.4% to US$98 billion in 2017.
South Korea’s economy benefitted from surging exports in 2017, which led to the Bank of Korea (BoK) raising its benchmark interest rate in November for the first time since 2011. While the government expects the country’s economy to expand 3% in the new year, the BoK will “ carefully decide” on whether monetary accommodation needs some adjustment.
The large trade surplus may continue to be an irritant for US President Donald Trump, who has demanded better trade terms. South Korea is on the US Treasury’s currency manipulation watch list, and in October it agreed to amend a free-trade deal with the US.
Global trade volume is expected to continue rising in 2018 as the global economy recovers and IT demand expands, South Korea’s Trade Ministry said in its statement.
Potential negatives include the strengthening of trade protectionism, a stronger won, rising interest rates and climbing oil prices.
The won is likely to trade at an average of 1,100.8 per dollar in 2018, the Trade Ministry said; it ended 2017 at 1,070.65.
Currency volatility may increase on trade protectionism, other countries’ monetary normalisation and geopolitical risks.
Exports of semiconductors are expected to “slightly rise” going forward as investments in Internet of Things and big data increase amid short supply, the Trade Ministry said.
Shipments to China rose 14.2% in 2017 from a year earlier, while those to Japan grew 10.1% and to Vietnam surged 46.3%.
Exports to the US increased 3.2% in 2017. The trade surplus with the US narrowed to US$18 billion compared to US$23.3 billion a year ago. — Bloomberg