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Economy

Korea July exports hit record on strong chip, auto demand

July exports rise 29.6% to $55.4 billion as bio health, EV battery shipments also grow

By Aug 01, 2021 (Gmt+09:00)

Container terminal at the Busan New Port in Busan.
Container terminal at the Busan New Port in Busan.

South Korea’s exports hit a record high in July on strong shipments of both main products such as cars and chips, as well as new growth ones including biosimilars and batteries.

“It is a valuable achievement that both major and new industries grew together while they overcame the COVID-19 crisis, enhancing exports fundamental,” said Minister of Trade, Industry and Energy Moon Sung-wook.

The outlook remained bright given signs of a global economic recovery, while some analysts warned of a slowdown in coming months due to a resurgence in the COVID-19.

Exports jumped 29.6% from a year earlier to $55.4 billion in July, the largest since the country started compiling such data in 1956, according to the trade ministry on Aug. 1. Daily exports also soared 32.2% to $2.3 billion on average.

Overseas sales in the first seven months stood at an all-time high of $358.7 billion as exports have been growing more than 20% since April.

CHIPS, AUTOS AND PETROCHEMICALS

The country’s key products such as chips and cars continued to lead overall exports.

“Korea’s major industries are globally competitive. Demand for Korean products surged as the global economy recovered from the COVID-19,” said a ministry official.

Chips exports totaled $11 billion, surpassing the $10 billion mark for a three consecutive month. That was even higher than $10.4 billion in July 2018 when the industry enjoyed a memory chip supercycle.

Major data center companies expanded servers, raising demand for high-capacity DRAM, while mobile phone makers increased orders ahead of new smartphone launches.

Exports of computers, including solid state drives (SSDs), laptops and desktops, rose 26.4% to $1.5 billion thanks to increasing work from home in the globe.

Car shipments grew 12.3% to $4.1 billion as the global automotive chip shortage eased, helping car makers meet heathy demand for eco-friendly models and SUVs.

Hyundai Motor's SUVs and sedans are waiting to be loaded for exports.
Hyundai Motor's SUVs and sedans are waiting to be loaded for exports.

Petrochemical exports surged 59.5% on strong consumption of packing materials and disinfection equipment as COVID-19 infections kept rising.

BIO HEALTH, BATTERY

New industries such as bio health and electric vehicle (EV) battery also enjoyed healthy growth in exports, adding to views that the country’s overall industry fundamental continue to improve.

Bio health’s exports grew 27.2% on sustained sales of biosimilars in overseas markets and rising demand for COVID-19 test kits due to the pandemic’s variant. Shipments to Southeast Asia almost quadrupled in July.

The fast-growing global EV markets lifted battery exports, which has been rising for an 11th straight month. Sales to the US last month surged 182.9% from a year earlier.

As most industries continued to report strong exports, analysts are keeping an eye on whether country can post the largest exports and the biggest trade for this year. In 2018, the nation set a record $604.9 billion for exports and an all-time high of $1.1 trillion for trade.

The outlook remained rosy, given the reviving global trade. The global trade in the first five months of 2021 rose 27.4% to a record high, according to the World Trade Organization (WTO). The Bank of Korea and private economic institutions speculate this year’s exports and trade will exceed the $600 billion and $1 trillion marks, respectively.

Still, the Delta variant is a key hurdle to achieve the forecast as it could threaten the global economic recovery. Goldman Sachs cut forecast on the US economic growth for the third and fourth quarter by 1 percentage point to 8.5% and 5%, respectively.

Write to Ji-Hoon Lee at lizi@hankyung.com

Jongwoo Cheon edited this article.

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