South Korea's trade surplus grew in September to 3.15 billion US dollars as imports contracted at a faster pace than exports, a government report showed Monday.
Trade surplus reached 3.15 billion dollars in September, up from a revised surplus of 2 billion dollars tallied in the previous month, according to the report by the Ministry of Knowledge Economy.
The trade balance stayed in the black for eight straight months thanks to steeper fall in imports than exports, but exports kept its minus growth for three straight months amid the global economic slowdown stemming from the protracted European fiscal crisis.
Exports, which account for around half of the South Korean economy, retreated 1.8 percent on-year to 45.66 billion dollars in September. The exports plunged 6.2 percent in August and 8.8 percent in July respectively.
Imports tumbled 6.1 percent on-year to 42.51 billion dollars in September, maintaining its on-year decline for the seventh consecutive month.
Exports contracted at a slower pace, but it should not be viewed as a positive signal, market watchers said. "In August, labor strikes in Hyundai-Kia Automotive Group reduced auto exports, but the end of labor strikes brought about an increase in auto production last month, having a positive impact on exports. Nevertheless, it is too early to assess that exports resumed recovery," said Yum Sang-hun, an analyst at SK Securities.
Experts expected the exports to recover during the remainder of this year due to favorable overseas market conditions arising from stimulus measures by major central banks in the U.S. and Europe. "We do not view the improvement over previous months as a sign of export recovery. Nevertheless, we expect South Korea's monthly export volume to reach year-high levels during the October- December period on peak seasonality and likely favorable overseas market conditions," said Park Hee-chan, an economist at Mirae Asset Securities.
Exports to China, South Korea's No.1 trading partner, grew 1.1 percent in September from the same month of last year, with those to the Middle East jumping 17.8 percent over the cited period. Shipments to the European Union (EU) dropped 5.1 percent on-year in September, with those to Japan and the Latin American region plunging 12.6 percent and 21.8 percent each last month.
Major export items showed mixed picture. Exports of petroleum products and auto parts grew 24 percent and 1.4 percent each on- year in September, and shipments of telecommunication devices expanded 10 percent last month, the first expansion in 12 months thanks to solid demand for new models such as Galaxy S3 made by Samsung Electronics.
Exports of ships tumbled 50.6 percent on-year in September, keeping their negative growth, while shipments of chips, automobiles and steel products decreasing 3 percent, 5 percent and 9.1 percent respectively over the same period.
Meanwhile, the import growth kept its downward trend for seven months in a row that offset a slower reduction in exports. Weak export demand had a negative impact on the domestic economy, leading to a reduction in imports.
Imports of raw materials plunged 9.1 percent in the first 20 days of September from the same period of last year, but inbound shipments of capital goods and consumer goods grew 5.2 percent and 3.9 percent respectively over the cited period.
The ministry forecast that the country's major export destinations such as China, the U.S. and the EU would show a delayed recovery during the fourth quarter, but it said that exports will be boosted by the government's measures to support local exporters.
For the first nine months of this year, the trade surplus amounted to 18.76 billion dollars, down from 21.64 billion dollars for the same period of last year. Exports contracted 1.5 percent on-year to 408.43 billion dollars during the January-September period, while imports fell 0.9 percent to 389.67 billion dollars.