South Korea’s economic growth slowed in the second quarter of this year from a year earlier due to decreased exports, mainly in shipments of transportation equipment, petrochemicals and chemical products. In the second quarter, GDP increased 0.6%, down from the previous quarter’s 1.1% gain.
Exports in the second quarter fell 3% from the previous quarter and declined 0.1% from the previous year. Although the second quarter exports declined, exports during the first half of 2017 totaled at US$279.4 billion, up 15.8% points from the same period of 2016 while imports jumped 21% to US$233.6 billion resulting the trade surplus of US$45.8 billion.
Both exports and imports marked the largest highest half year tally since 2014 on the upturn in oil prices, and recovering demand for chips, steel and displays.
The Ministry of Trade expects that South Korea’s exports will grow 10% to US$545 billion by the end of 2017 on the back of recovering world economy and expanding global trade and imports will likely rise 14% on-year to US$463 billion.
Under the new Moon Jae-In government, consumer sentiment improved with more spending on durable goods, such as home appliances and handsets while spending less on clothes and shoes.
South Korea’s jobless rate stood at 3.8% in June, up from 3.6% a year earlier, but the unemployment rate for young people aged between 15 and 29 was 10.1%, up from 9.4% tallied a year earlier and from May’s 8.6%. As a countermeasure, South Korean government is pushing for an 11.2 trillion won (US$9.99 billion) supplementary budget aimed at creating jobs and boosting the economy.
The South Korean economy seems to have entered an upside cycle as its exports, the key economic driver, posted the eighth consecutive month of growth since November last year on the back of rising global trade, therefore, South Korea government raised its economic growth forecast for this year to 3%, pledging to create inclusive growth with its four major economic policy pillars of income-led growth, job creation, a fair economy and innovative growth.
The volatility in the US Dollar- Korean Won exchange rates slightly eased in the second quarter from a quarter earlier as global financial markets stabilized. In the second quarter, the local currency traded at an average of 1,130.1 Korean Won against the US Dollar, compared with 1,152.6 won in the previous quarter.
The exchange rate for Canadian Dollar averaged at 840.88 won in the second quarter of 2017, down by 6.8% from 902.52 in the same quarter of 2016 and also down by 3.53% from 871.69 in the previous quarter.
In the first half of the year, South Korea’s household debt grew by 40.3 trillion won, compared with an expansion of 50.4 trillion won for the same period in 2016. The country’s household debt has crimped private consumption and made it harder for the central bank to increase its key interest rate. With home prices in Seoul and other areas showing signs of overheating, South Korean government has pushed to prevent liquidity from being used for real estate speculation.
Amid ongoing government intervention to limit the supply of new homes, especially new apartment in Seoul, as a way of limiting the rise in household debts, South Korea’s housing starts in number of buildings in the first half of 2017 decreased 11.6% to 51,157 buildings from a year earlier 57,875 buildings while that in number of units significantly decreased 29% to 168,799 units from a year earlier 237,750 units. Housing permits in number of buildings for the same period of 2017 also decreased 5.9% to 60,732 buildings from a year earlier 64,529 buildings while that in number of units significantly decreased 16.2% to 297,787 units from a year earlier 355,309 units.
While the overall residential construction sector struggles, the number of wood building permits in the first half of 2017 increased 4.4% to 8,767 buildings from a year earlier. However, the number of wood building starts for the same period decreased 4.8% to 7,075 buildings.
Total floor areas of wood building permits for the same period in 2017 increased 10.2% to 812,698 m2 but that of wood building starts slightly decreased 1.8% to 660,341 m2 from a year earlier.
BC softwood lumber export volume to South Korea for the first five months of 2017 decreased 2.7% to 124,495 cubic meters as compared to 127,938 cubic meters for the same period of 2016.
However, export value for the same period increased 8.6% to CAD$35.367 million as compared to CAD$32.565 million for the same period in 2016.