Canada Wood Today | The Canada Wood Group

Korea Economy, Construction & Lumber Shipments

Tai Jeong

By Tai Jeong

Technical Director, Canada Wood Korea

August 12, 2015

Economy Update

South Korea’s economic growth slowed in the second quarter as the country was hit hard by the MERS outbreak and a severe drought.  The economy grew 0.3% in the second quarter of 2015, decelerating from a 0.8% on-quarter expansion three months earlier.  From a year earlier, Asia’s fourth-largest economy expanded 2.2%, growing at the slowest pace in more than two years.

South Korea’s exports in the first six months of 2015 decreased 5.1% to US$268.7 billion from a year earlier, while imports fell 15.6% on-year to US$222.4 billion.  As a result, South Korea posted a 10.1% drop in total trade volume of US$491.1 billion on-year, marking the lowest level since the second half of 2010.  Sluggish exports of South Korea are stemming from one-off factors such as a slowdown in Europe and China, a sharp drop in crude oil prices and the weakening Japanese yen and euro, and also from systemic factors of a downside cycle of world trade and the Chinese economy and overseas relocation of production bases by local businesses.

South Korea’s consumer spending in the second quarter of 2015 dipped 0.3% from three months earlier, turning around from a 0.6% increase in the first quarter.  Government spending growth picked up to 0.7% from 0.2%, while facility investment growth also accelerated to 0.4% from 0.2%.

South Korea’s jobless rate edged up to 3.9% in June as the MERS outbreak caused a sharp slowdown in growth of new hirings by the service sector.

The exchange rate for Canadian Dollar averaged at 900.07 won in June, 2015, dropped 4.42 % from 941.73 in June, 2014 and up by 0.33% from 897.27 in one month earlier.

Housing Construction

Korean Housing Starts Summary and Market Condition:

South Korea’s housing starts in year-to-date May of 2015 increased 14% to 43,398 buildings from a year earlier 38,061 buildings owing to the continuous government measures to revamp the country’s property market and the increased demand from end-users on new housings.  Housing permits in the same period also increased 9.7% to 46,155 buildings from a year earlier 42,069 buildings.

The number of wood building permits and wood building starts in year-to-date May of 2015 continuously increased 13.6% to 6,043 buildings and 12.2% to 5,225 buildings respectively compared with those in 2014

Wood Building 2010 2011 2012 2013 2014 Jan.-May Jan.- May (%)
2014 YTD 2015 YTD
Number of Permits 10,922 11,686 11,826 11,710 13,062 5,319 6,043 13.6
Number of Starts 9,585 10,037 10,369 10,339 11,493 4,658 5,225 12.2

Source: Ministry of Land, Infrastructure and Transport (as a percent compared to previous year same month and period)

The South Korean government will extend a temporary measure to ease mortgage regulations, which was firstly implemented in August last year, for another year until the end of July 2016 in a bid to prop up the local economy that is showing budding signs of recovery.

South Korea’s home transactions jumped 29.1% on-year to a record 610,796 through June, while the number of construction permits issued for new homes climbed 36% on-year to a 12-year high of 300,080 in the first half on rising house rent fees and record-low loan rates.

Lumber Shipments

BC softwood lumber export volume to South Korea for the first five months in 2015 dramatically increased 14.5% to 123,973 cubic meters as compared to 108,145 cubic meters for the same period in 2014.  The increase compared with the same period last year was largely attributed to remarkable increase in WFC housing starts.

Export value in year-to-date April also increased 18% to CAD$33.903 million as compared to CAD$28.728 million in the same period in 2014, owing to the increased volume and the strengthened Korean won against Canadian dollar.

korea shipments