South Korea’s exports grew faster than expected in April, suggesting Asia’s fourth-largest economy is on track for recovery despite faltering signs elsewhere in Asia.
Exports in April were up 9% from a year earlier—the biggest jump in 15 months—to $50.32 billion, following a revised 5.1% gain in March, according to the trade ministry. The April figure beat the median 6.9% forecast of economists surveyed by The Wall Street Journal.
Imports also gained in April, with a 5% rise from a year earlier to $45.85 billion, exceeding both March’s 3.6% increase and the economists’ forecast of 4.2%.
The trade surplus widened to $4.46 billion in April from the previous month’s revised $4.17 billion, beating the poll’s projection of $3.79 billion. South Korea’s trade balance has been in the black since February 2012.
Cars, mobile handsets and memory chips led the brisk exports in April as demand grew in the U.S. and other markets. The trade data got a boost froma lower comparison base a year ago.
April’s growth in South Korean exports was the fastest since January 2013, with demand from advanced economies remaining firm: Shipments to the U.S. in April were up 19.3% from a year earlier, stronger than the previous month’s 16.9%.
South Korea’s stronger-than-expected numbers came as China, the growth engine of Asia—and the world’s export powerhouse for decades—sputters, threatening to sap the region’s economic vitality.
South Korean shipments to China, which absorbs a quarter of the country’s total exports, were up a mere 2.4% from a year earlier in April, slowing from the previous month’s 4.4% pace.
Combined first-quarter exports from Asia’s four export powerhouses—China, Japan, South Korea and Taiwan—were off 2% from a year earlier. Observers see any pickup in Asia as hardly nearing the growth levels seen before the 2008-09 crisis.
For 2013, South Korea’s exports grew 2.1% while imports fell 0.8%, which produced a trade surplus of $44.09 billion. The trade ministry forecasts a 6.4% rise in exports this year.
South Korean inflation in April hit an eight-month high, with the consumer price index up 1.5% from a year earlier, the fastest pace since August 2013—adding to pressure for taming prices.
“The Bank of Korea will begin normalizing interest rates in the second half of this year when we expect Korea’s negative output gap to have closed,” said Barclays economist Wai Ho Leong, who expects the central bank to raise its policy rate starting in the third quarter. The rate has been kept steady at 2.5% since May 2013.
The Bank of Korea said in April it expects the economy to expand 4% this year and 4.2% next year, up from a revised 3% growth in 2013.
Source : Channel News Asia | May 1, 2014