Exports rise 2.7% in Nov. but outlook ahead is iffy

Good economic news came Thursday as Korea’s exports, which have been tumbling fairly steadily, rose for the first time in three months largely thanks to semiconductors.

But concerns remain that the bouncing back will be fleeting with growing protectionism and weak international trade.

According to the Ministry of Trade, Industry and Energy on Thursday, November exports grew 2.7 percent compared to a year ago to $37.5 billion. By volume, exports rose 3.5 percent year-on-year, which is the first time since May.

For the first time since April 2014, 11 out of 13 major exports saw growth. Semiconductor exports help boost overall growth.

Due to the ongoing restructuring, low global demand and the discontinuation of Samsung’s troubled Galaxy Note7 phablet, vessels and telecommunications were the only two areas that saw year-on-year declines.

“Semiconductor exports rose significantly, or 11.6 percent from a year ago, as more cellphone manufacturers abroad decided to use bigger memory chips and as prices of such storage devices rose compared to the past,” said Lee Min-woo, a director at the Trade Ministry. “Exports of automobiles also rose for the first time since June 2015 as strikes by automakers came to an end. The figure rose 1.5 percent from a year ago.”

Machinery exports jumped 19.3 percent last month as demand from Europe and South America increased. This was the first time since December 2014 that machinery exports saw double-digit growth.

On the down side, telecommunications exports tumbled 17.9 percent. Telecommunications exports in October fell 28.1 percent, which was the sharpest drop since 2012.

The ministry attributed the drop to the discontinuation of the Galaxy Note7 and rising competition from cheaper phones on the global market.

Exports to China rose for the first time in 17 months, or since June 2015, as there was more demand for petrochemical and machinery products. Exports to China rose 0.4 percent year on year. Exports to Vietnam continued to grow for the ninth consecutive month and rose 38.5 percent year on year last month.

However, many analysts are uncertain whether exports will continue to improve due to various uncertainties such as the political chaos in the nation and the incoming administration in the United States, which could be more protectionist.

“There are many positive factors in November’s export data, but there also are downward risks, such as a slow global economy and trade volume, possible interest rate hikes in the United States and growing protectionism,” said an official at the Trade Ministry.

Some economists, on the other hand, argued that there also are some positive factors that will help the country’s export grow.

“I think there is a low chance of the incoming Trump administration proceeding with protectionism policies since they will also hurt the competitiveness of America’s own companies like Apple,” said Kim Moon-il, an economist at Heungkuk Securities. “I think Trump’s slogans about protectionism were a mere means to becoming the president and I don’t think we need to worry too much about Korea’s exports falling after the Trump inauguration.”

Park Hee-chan, an economist at Mirae Asset Securities, also argued that Korea’s exports will likely grow next year as companies will benefit from rising crude oil prices.

“Korea’s exports to emerging countries have improved and demand from such countries continue to grow,” said Park. “Oil prices are likely to rise as oil producing countries are trying to cut output, and this will help export companies get more profit from exporting since the prices of products will eventually go up.”

More government data released Thursday showed that consumer prices managed to increase more than 1 percent compared to last year for a third straight month. Korea’s inflation rose 1.3 percent last month, Statistics Korea said on Thursday. The rate remained below the 1 percent level from May to August, but it began to surpass the 1 percent level in September.

The price of food including agricultural produce, livestock and fishery products rose 7.9 percent last month, while the price of electricity, water and gas fell 6.4 percent during the same period. The price of food contributed to raising of overall inflation by 0.57 percentage points, and electricity bills contributed to lowering the rate by 0.31 percentage points.

Basic living expenses rose 1.1 percent year on year. This was the highest growth since July 2014, when they rose 1.4 percent.

“Basic living expenses rose mainly as prices of agricultural products remained high,” said Woo Young-je, a director at the statistics agency.

Prices of napa cabbage rose 82.1 percent year on year and white radish prices jumped 120.7 percent in the same period.

Service-sector prices in November rose 1.8 percent year on year. The cost of jeonse, or lump-sum deposit rent contracts, was up 3.3 percent compared to last year.

“Consumer prices rose as the fall in crude oil prices has slowed,” said Yoo Soo-young, a director at the Ministry of Strategy and Finance. “The government has decided to lower electricity bills starting from this month and we will do our best to reduce burdens for people paying basic living expenses.”

By region, consumer prices increased the most in the southern island of Jeju by 1.7 percent.

Meanwhile, Korea’s current account surplus, which is affected by broader factors such as financial transfers, widened to $8.72 billion in October from a $8.07 billion surplus in September, according to preliminary Bank of Korea data.

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]