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UPDATE 2-S.Korea's Feb exports post best growth in 5 years as global demand improves
March 1, 2017 / 12:46 AM / 7 months ago

UPDATE 2-S.Korea's Feb exports post best growth in 5 years as global demand improves

* Trade data tops forecasts in sign of strengthening global demand

* Exports, imports rise at fastest pace since Feb 2012

* Feb exports +20.2 pct y/y (Reuters poll: +14.7 pct)

* Feb imports +23.3 pct y/y (Reuters poll: +21.7 pct)

* Govt sees trade recovery trend extending into March (Adds more details)

By Christine Kim and Cynthia Kim

SEOUL, March 1 (Reuters) - South Korean exports grew at their fastest pace in five years in February in a further sign that global demand is strengthening, even as trade-reliant economies brace for a possible rise in U.S. protectionism.

Both exports and imports grew more than expected, jumping 20.2 percent and 23.3 percent respectively, and both at the strongest pace since February 2012, data showed on Wednesday.

The trade ministry said exports to China, South Korea’s biggest customer, surged 28.7 percent on-year, posting the best growth since late 2010. Semiconductor exports posted their best monthly performance on record, riding on strong electronics demand.

“February data shows that there is a clear export resurgence, as exports in terms of both price and volume seem to be increasing,” said Lee Sang-jae, an economist for Eugene Investment & Securities in Seoul.

Shipments to the United States rose 1.7 percent in annual terms, snapping two months of falls, on more demand for cars, oil products and heavy electric equipment.

The trade surplus with the United States stood at $1.56 billion last month, down from $2.17 billion in February last year, the ministry said, on South Korean imports of U.S semiconductor manufacturing machinery and aircraft.

South Korea has had monthly trade surpluses with the United States since August 2011.

The headline February trade surplus stood at $7.22 billion. The rise in exports had largely been expected as the finance minister had announced the gain last week.

RISING TENSIONS

Economists polled by Reuters had projected February exports would rise 14.7 percent and imports 21.7 percent.

“Shipments to China are still growing, but we need to see if the deployment of the THAAD (Terminal High Altitude Area Defence) system has any impact going forward,” Lee said, referring to a row between South Korea and China over Seoul’s decision to host the controversial U.S. missile defence missile system.

South Korean officials have expressed their suspicions that China is indirectly retaliating against the THAAD system, but Finance Minister Yoo Il-ho has said China has not done anything yet to prompt an official complaint.

Shipments to China are usually driven by intermediate goods, and most of Beijing’s actions have been focused so far on some consumer products and cultural imports from South Korea, like musical concerts.

Markets in South Korea were closed on Wednesday for a public holiday.

The working day average value for exports in February stood at $1.96 billion, Reuters calculations showed, versus $1.87 billion for January.

The improvement trend for exports is expected to go on into March, the trade ministry said.

Despite the increasingly rosy data, authorities in South Korea and other Asian economies are wary of risks to exports later this year if new U.S. President Donald Trump follows through on pledges to take a more protectionist trade stance.

The ministry added on Wednesday that increased volatility in financial markets could also pose risks to trade.

In a bid to preemptively tackle these hurdles, South Korea said earlier this week that it plans to diversify markets and products for exports to reduce its reliance on its two biggest customers: China and the United States.

Some local companies have also decided to boost investment in the United States to prevent their businesses from getting hit by any disruptive measures from Trump, who has vowed to create more jobs in the United States.

On Wednesday, LG Electronics Inc announced it will build a U.S. factory for home appliances in Tennessee worth $250 million.

Reporting by Christine Kim and Cynthia Kim; Editing by Kim Coghill and Randy Fabi

Our Standards:The Thomson Reuters Trust Principles.
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