February 27, 2018 / 3:11 AM / 10 months ago

Lunar New Year crimps South Korea export growth in February, chip sales seen strong

SEOUL (Reuters) - Though global demand for memory chips and petroleum products remained robust, South Korean exports were likely to have barely risen in February from year ago levels as the Lunar New Year holidays meant there were less working days, a Reuters survey showed.

FILE PHOTO: An employee walks on a crane at a container terminal at Incheon port in Incheon, South Korea, May 26, 2016. REUTERS/Kim Hong-Ji/File Photo

The median forecast from the poll of 11 economists predicted 0.4 percent growth from a year earlier, the slowest since November 2016. Exports had posted 22.5 percent growth in January.

“There were 19.5 working days in February and 22 for last year, which must have significantly dragged down overall export growth,” said Park Ok-hee, an economist at IBK Securities.

Preliminary data already released by the government had shown exports contracted 3.9 percent during the first 20 days of February, while imports rose 13.6 percent over the same period.

“By sector, semiconductors and petroleum products are likely to have sustained firm growth whereas demand for automobiles may have decreased,” Park added.

The median prediction for imports pointed to 13.1 percent growth during February, partly due to higher global oil prices. Imports grew 20.9 percent in January.

Bolstered by strong exports, January industrial production was likely to show a 2 percent rise, as there were more working days than there were in the same month last year.

Lee Sang-jae, an economist at Eugene Investment & Securities said “firm exports and increased domestic consumption gave great support” to the economy in January.

But, he warned that rising trade protectionism and the looming closure of one of General Motors’ plants in Gunsan could weigh on factory output for February.

The U.S. Commerce Department recommended President Donald Trump impose steep curbs on steel imports, including those from South Korea, after slapping bigger taxes on washers and solar panels in January.

GM has announced it would shut down a plant in Gunsan by May, and decide within weeks on the remaining three plants in the country. The company is in wage talks with its labor union.

The poll put the annual inflation rate for February was seen at 1.2 percent, up from 1.0 percent in January.

Trade and industrial output data are due to be released on Thursday and Friday respectively, while inflation data will be out on March 6.

Reporting by Dahee Kim; Additional reporting by Yuna Park, Haejin Choi; Editing by Simon Cameron-Moore

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