South Korea Economy, Housing Construction & Lumber Shipments
The South Korean economy has started 2017 with discouraging figures showing sluggish exports, pessimistic consumer sentiment, heavier debt and a high unemployment rate.Political uncertainties stemming from the impeachment of President Park in late 2016 on top of external global uncertainties will further pressure South Korean economy for some time.Mainly affected by increased political uncertainties and corporate restructuring, South Korea’s 2017 growth outlook was lowered to 2.5% by the Central Bank of Korea.
South Korea’s exports fell 5.9% on-year to US$495.5 billion in 2016 from a year earlier due largely to a drop in global demand and weak oil prices, while its imports dropped 7.1% on-year to US$405.7 billion. Trade surplus stood at US89.8 billion in 2016, down slightly from US$90.3 billion a year earlier.
Despite the prolonged economic slowdown, South Korea’s consumer prices grew 1% in 2016 from a year earlier, sparking concerns over whether South Korea could face stagflation and the South Korean government expects the country’s inflation would go up 1.6% in 2017 on the back of rising oil prices. Local consumer spending has also remained weak throughout 2016 amid a steady increase in household debt.
South Korea’s unemployment rate in 2016 was 3.7%, the highest since 2010, inching up 0.1% point from 2015.The exchange rate for Canadian Dollar averaged at 885.30 won in December, 2016, up by 3.34% from 856.66 in December, 2015 and also up by 2.42 % from 864.34 in one month earlier.
South Korea’s housing starts in year-to-date November of 2016 increased 2.3% to 106,029 buildings from a year earlier 103,632 buildings. Housing permits in the same period also increased 5.7% to 119,494 buildings from a year earlier 113,027 buildings.
The boom in the construction industry in recent years is expected to slow in 2017 due to possible fall in home prices caused by the tightened government policy on real estate and increased interest rate.
The number of wood building permits and wood building starts in year-to-date November of 2016 also increased 10.2% to 15,582 buildings and 10.4% to 13,855 buildings respectively compared with those in 2015. Both total floor areas of wood building permits and starts in the same period of 2016 remarkably increased to 13.5% and 14.9% to 1,371,153 m2 and 1,246,114 m2 respectively from a year earlier.
BC softwood lumber export volume to South Korea for the first eleven months of 2016 increased 3.4% to 252,651 cubic meters as compared to 235,005 cubic meters for the same period of 2015.
However, export value for the same period of 2016 slightly decreased 0.4% to CAD$66.821 million as compared to CAD$67.086 million in 2015.
For the year-to-date to November of 2016, BC’s SPF shipment to South Korea increased 4.1% to 238,871 cubic meters while shipments of Hemlock, Western Red Cedar and Douglas-Fir plunged 30%, 59% and 64% to 6,659m3, 906m3 and 931m3 respectively.