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UPDATE 2-S.Korea's soaring exports top expectations in six-year run of growth
September 1, 2017 / 2:40 AM / 3 months ago

UPDATE 2-S.Korea's soaring exports top expectations in six-year run of growth

(Combines data sets, adds analyst comment)

* Aug exports +17.4 pct (Reuters poll +14.3 pct)

* Aug imports +14.2 pct (Reuters poll +11.4 pct)

* Aug inflation +2.6 pct, fastest since 2012 April

By Cynthia Kim and Christine Kim

SEOUL, Sept 1 (Reuters) - Booming sales of memory chips and electronic displays in August took South Korea’s exports to their longest run of growth in almost six years, highlighting a nascent normalisation in global demand.

Shipments to the United States surged 23.2 percent from a year earlier, supported by U.S. demand for memory chips and machinery, potentially undermining South Korea’s position in the renegotiation of a free trade agreement President Donald Trump has called “a horrible deal”.

“Sales of semiconductors continue to be star performer here, and the most important thing to monitor is whether prices of memory chips hold up through the second half,” said Lee Sang-jae, an economist at Eugene Investment & Securities.

“Exports growth will likely come down to single-digit in November and December this year on base effect, as exports improved towards the end of last year.”

South Korea is the first among major exporting countries to publish its monthly trade figures. Exports to China rose 15.6 percent from a year earlier, posting the longest stretch of sales to its bigger neighbour since 2014, while shipments to the European Union surged 43.2 percent.

Preliminary data showed August’s exports rose 17.4 percent from a year earlier to $47.1 billion, but imports surged 14.2 percent to $40.1 billion, the Ministry of Trade, Industry and Energy said.

This produced a $7 billion trade surplus, down from the $10.3 billion surplus seen in July.

August exports beat a 14.3 percent expansion seen in a Reuters survey and posted a double-digit growth for an eighth straight month, the longest such expansion since September 2011, adding momentum to economic growth.

Exports of semiconductors posted record sales of $8.76 billion in August, while OLED screens also marked record overseas sales of $860 million in the month.

Sales of nine of South Korea’s 13 major export items expanded, the trade ministry said.

RAIN, HEAT DRIVE UP FRESH FOOD PRICES

Separate data on Friday showed South Korea’s annual inflation surged to more than a five-year high of 2.6 percent in August, versus 2.2 percent in July.

Heavy rain and a summer heatwave pushed up the price of fresh foods, including a 71.4 percent jump in the price of radish.

Economists including Kim Doo-un at Hana Financial Investment expect consumer prices will continue to fluctuate through the October shopping season when South Koreans celebrate the national Chuseok holiday.

Inflation has remained near the central bank’s 2 percent target this year as private consumption in Asia’s fourth-largest economy recovered and volatile weather caused spikes in fresh produce prices. (Reporting by Cynthia Kim and Christine Kim; Additional reporting by Dahee Kim)

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