Interim trade numbers up to 20 June suggest a significant rise in South Korea's exports and trade surplus in June. Societe Generale estimates, exports to pick up from $42.4bn in May to $48.0bn in June, while imports are likely to rise modestly from $36.1bn to $37.5bn over the same period. On this basis, the trade surplus would rise to a record-high level of $10.5bn. The expected pick-up in exports can be partially explained by more working days and the usual volatility in the shipbuilding sector.
But it should also reflect a meaningful rebound in exports, which is clearly a positive sign for the H2 growth outlook. Meanwhile, the substantial trade surplus, which exceeds $10bn, is likely to strengthen the current range-bound trading in the USD/KRW exchange rate, on expectations that the upside in the USD/KRW will be capped by the sustained trade surplus, adds SocGen.
