| Actual | Previous | |
|---|---|---|
| Balance | $1.13B | $-2.1B |
| Imports - Y/Y | -11.7% | -14.0% |
| Exports - Y/Y | -6.0% | -15.2% |
Highlights
South Korean exports posted their ninth straight year-over-year decline in June amid slower global demand but the pace of decrease decelerated to 6.0 percent from 15.2 percent recorded in May. It was larger than expected but the smallest in eight months.
Reflecting weak domestic demand, imports fell at a faster pace of 11.7 percent on year in June for the fourth consecutive drop following a 14.4 percent slump in May. As a result, the country's trade balance came to a surplus of $1.13 billion after a deficit of $2.1 billion in May. It was the first trade surplus since February 2022.
South Korea's manufacturing purchasing managers' index (PMI) data released earlier this month showed the index edged up from 48.1 in April to 48.4 in May, but remained below the 50.0 no-change mark, indicating the 11th consecutive monthly deterioration in the health of the manufacturing sector.
Reflecting weak domestic demand, imports fell at a faster pace of 11.7 percent on year in June for the fourth consecutive drop following a 14.4 percent slump in May. As a result, the country's trade balance came to a surplus of $1.13 billion after a deficit of $2.1 billion in May. It was the first trade surplus since February 2022.
South Korea's manufacturing purchasing managers' index (PMI) data released earlier this month showed the index edged up from 48.1 in April to 48.4 in May, but remained below the 50.0 no-change mark, indicating the 11th consecutive monthly deterioration in the health of the manufacturing sector.
Definition
The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Trade balance values are calculated by deducting imports (cif) from exports (fob). The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of South Korea’s high reliance on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of South Korea’s high reliance on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
