| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Balance | $8.4B | $8.3B to $9.1B | $9.08B | $6.94B |
| Imports - Y/Y | 3.3% | -5.3% | ||
| Exports - Y/Y | 4.3% | -1.3% |
Highlights
South Korea's trade balance trade surplus widened from $6.94 billion in May to $9.08 billion in June. Exports rebounded with an increase of 4.3 percent on the year after falling 1.3 percent previously, while imports rose 3.3 percent on the year after a previous fall of 5.3 percent.
Although exports to the United States and China fell 0.5 percent and 2.7 percent respectively in June, demand elsewhere was robust, with exports to the European Union increasing 14.7 percent on the year. Exports of semiconductors and motor vehicles recorded solid growth. The near-term outlook, however, remains uncertain, with a freeze on an announced increase in tariffs on South Korea's exports to the United States scheduled to expire next week.
Although exports to the United States and China fell 0.5 percent and 2.7 percent respectively in June, demand elsewhere was robust, with exports to the European Union increasing 14.7 percent on the year. Exports of semiconductors and motor vehicles recorded solid growth. The near-term outlook, however, remains uncertain, with a freeze on an announced increase in tariffs on South Korea's exports to the United States scheduled to expire next week.
Market Consensus Before Announcement
The export powerhouse is seen in surplus by $8.4 billion in June versus $6.9 billion in May.
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.
