South Korea's trade surplus reduced in July to 2.7 billion U.S. dollars last month from a month earlier as exports resumed its minus growth amid global economic slowdown, a government report showed Wednesday.
Trade surplus reached 2.7 billion dollars in July, down from a surplus of 4.91 billion dollars in the previous month, according to the report by the Ministry of Knowledge Economy. The trade balance stayed in the black for six straight months, but the July surplus reduced due to a sharp fall in exports.
Exports, which account for around half of the Asia's No.4 economy, tumbled 8.8 percent on-year to 44.6 billion dollars in July. The country's exports logged an on-year expansion of 1.1 percent in June after posting an on-year decline for three months from March to May, but the figure resumed its negative growth last month.
Imports retreated 5.5 percent on-year to 41.9 billion dollars in July, maintaining its on-year decline for five straight months.
Market watchers predicted the smaller trade surplus for July due to global economic slump. "Both exports and imports cooled sharply through the second quarter of the year, in line with the global slowdown. There is no way for Korean exporters to dodge the global slowdown," Moody's Analytics said in a report before the data release.
As for the export outlook, Mirae Asset Securities' economic Park Hee-chan forecast that the country's export growth will likely move in positive territory in August and remain there, saying that any improvement in the Chinese and U.S. economies in the second half would directly contribute to the on-year export growth going forward.
Exports of ships and telecommunication devices plunged 57.5 percent and 34.7 percent each on-year in July, leading the July drop in exports. Shipments of petrochemical, steel, petroleum products, automobiles and chips reduced 22.3 percent, 20.2 percent, 12.2 percent, 5.3 percent and 1.2 percent respectively over the same period, but exports of liquidity crystal display (LCD) panels, general machinery and auto parts grew 6.7 percent, 3.5 percent and 1.9 percent each.
By region, exports to the European Union (EU) and China declined 4.9 percent and 0.5 percent each on-year in July, but those to the United States and Japan expanded 10 percent and 12.8 percent respectively.
The import growth stayed in negative terrain for fifth consecutive month that offset the drop in exports. Weak export demand had a negative impact on the domestic economy, leading to a reduction in imports.
Imports of natural gas jumped 28.5 percent on-year in July due to higher import prices that rose to 823.9 U.S. dollars a ton last month from 748.2 dollars a year earlier, but imports of other items reduced last month.
Inbound shipments of crude oil and oil products declined 7.6 percent and 11 percent each on-year in July, with imports of steel products and auto parts plunging 15.4 percent and 20.7 percent respectively. Imports of semiconductor equipment plummeted 31.4 percent over the same period.
For the first seven months of this year, the trade surplus amounted to 13.41 billion dollars. Exports contracted 0.8 percent on-year to 319.84 billion dollars during the January-July period, but imports grew 1.3 percent to 306.43 billion dollars.
The ministry cautioned that the country's exports will not improve to a large extent in the second half of this year given slowing growth in major economies, saying that the International Monetary Fund (IMF) lowered its global economic growth outlook for 2012 to 3.8 percent from 4.1 percent./.