South Korea Economy, Construction and Lumber Shipments
South Korea has regained its title as the world’s 11th-largest economy in nine years with its GDP standing at US$1.38 trillion in 2015. It is the first time in nine years that South Korea has regained its 11th place in the global GDP rankings from 15th in 2008 amid the global financial crisis.
South Korea extends record surplus in July on falling oil prices rather than an increase in exports over imports on global demand. Exports tumbled 10.2% to reach US$41 billion in July on-year, while imports decreased 14.4% to reach $33.3 billion in the same period. The July figure marked a record 19th straight month that exports decreased since January 2015. The trade surplus came to $7.8 billion, marking the 54th consecutive month of a surplus.
South Korea’s consumer prices rose 0.7% in July, marking the slowest in 10 months, due to falling international oil prices. Country’s unemployment rate stood at 3.5% in July, compared with 3.6% tallied in June.
The exchange rate for Canadian Dollar averaged at 877.97 won in July, 2016, down by 1.50% from 891.31 in July, 2015 and down by 3.31 % from 908.06 in one month earlier.
Korean Housing Starts Summary and Market Condition:
South Korea’s housing starts in year-to-date June of 2016 increased 6.0% to 57,875 buildings from a year earlier 54,585 buildings. Housing permits in the same period also increased 10.8% to 64,529 buildings from a year earlier 58,254 buildings, amid the South Korean government’s efforts to prop up the local real estate market.
The number of wood building permits and wood building starts in year-to-date June of 2016 also increased 13.0% to 8,396 buildings and 12.4% to 7,431 buildings respectively compared with those in 2015.
Source: Ministry of Land, Infrastructure and Transport (as a percent compared to previous year same month and period)
South Korea’s real estate market contracted in the second quarter of 2016 for the first time in more than four years due to the sluggish market posting 0.2% shrinkage in the real estate and rental sector from the first quarter. Given weak market conditions, real estate rental industry will unlikely post positive growth for the time being.
Of the aggregate South Korea’s household debts, home-backed loans extended by banks rose by 5.8 trillion won to 506.6 trillion won mainly due to an increase in the housing trade and a decline in interest rates. Despite efforts to tackle the potential risk factor for the local economy, South Korea’s household debt shows no signs of abating and, therefore, major banks in South Korea have tightened the screening of applications for mortgage loans.
A rise in Russian log and sawn softwood exports, coupled with the sharp depreciation of the Russian Ruble resulting in substantially lower sawlog costs for the sawmilling industry in Russia, had a negative impact on structural lumber exports from Canada to South Korea.
BC softwood lumber export volume to South Korea for the first six months of 2016 decreased 13.4% to 143,065 cubic meters as compared to 165,136 cubic meters for the same period of 2015.
Export value for the same period of 2016 also decreased substantially 12.5% to CAD$38.362 million as compared to CAD$43.859 million in 2015.
For the first six months of 2016, BC’s SPF shipment to South Korea decreased 11.8% to 137,849 cubic meters while shipments of Hemlock, Western Red Cedar and Douglas-Fir plunged 38.7%, 52% and 84.8% respectively.