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South Korea turned out to have benefited greater from the Korea-US (KORUS) free trade agreement(FTA) in April, which went into effect in March this year.
Combined value of the US’s imports from Korea ascended 14.6 percent from the previous month ($ 4.48 billion ) to $5.47 billion in April, marking the highest level, according to data made by the US Department of Commerce. The world’s largest economy’s imports from Korea ranged between $4.4 billion and $ 4.7 billion this year.
The US’s shipments to Korea, however, slumped 12 percent from the previous month to $ 3.76 billion in April. The US recorded a $1.77 billion trade deficit in trade with Korea, up three times from the deficit recorded in the previous month($552million).
By item, the US posted a $1.65 billion deficit in automobiles and auto parts, the sector that had raised much concerns during the FTA negotiations, with imports recording $1.76 billion and exports logging $100 million.
Given that the US’s trade deficit in the automobile and component sector came at $1.45 billion in the previous month, the deficit in automobiles and components widened significantly in April, realizing the projection that Korea’s automobile and component sector would benefit most from the trade agreements with the U.S.
“Large-scale transactions that exert meaningful influences on trade balance are generally yearly contracts”, a South Korea’s major private economic research institute added. “The trends in trade need to be monitored for at least six months to make reliable analysis concerning the effect of the KORUS FTA, as it takes more than three months for Korean exporters to find new buyers and make changes in existing clients in the U.S.”
South Korea’s trade maintains contracting S. Korea marked a trade surplus for the fourth month in a row in May but trade volume contracted for the third straight month compared to a year before.
Exports stood at $47.2 billion in May, down 0.4 percent on-year, with imports also shrinking 1.2 percent to $44.8 billion, leading to a trade surplus of $2.4 billion, up from the $2.1 billion surplus in April, according to the report by the Ministry of Knowledge Economy(MKE).
The country’s export growth at a slower pace is attributable to slower-than-expected economic growth in China and mounting eurozone crisis.
Exports gained a mere 0.6 percent on-year for the first five months of this year. There was a sharp drop in overseas demand for mobile communications equipment, ships and petrochemicals while auto parts and general machinery have fared well, the MKE explained.
As for imports, local demand for capital and consumer goods as well as commodities fell, whereas higher international energy prices caused imports of crude oil to go above $10 billion a month for the first time ever.
Europe crisis may cut S. Korea’s exports by 4 pct a year A one percent fall in GDP of EU countries causes a four percent drop in South Korea’s short-term exports to the economic zone, according to a reliable official report.
In the medium term, the nation’s exports to the EU will decline by about three percent, Korea Institute for Industrial Economics & Trade (KIET) said in the report.
The EU’s fiscal crisis is the biggest concern to Korea’s export this year as the worsening of the situation could trigger a recession around the world, the report said. Korea may be hit harder as it may lose the key export network to link China and the EU.
The EU accounts for about 10 percent of the nation’s export market but the economic crisis in the euro zone will decrease Korea’s exports to the EU and even affect China, decimating Korea’s entire export industry, the report said.
Earlier in April, the International Monetary Fund (IMF) forecast the worsening of the EU’s debt crisis will cut the global growth by two percentage points, the growth of the EU by 3.5 percentage points, and the growths of the US and Asia’s emerging conomies by one to 1.5 percentage point.
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