South Korean Economy, Housing & Lumber Shipments
South Korea’s exports rose 11.2% on-year to US$40.3 billion in January, 2017, extending its winning streak to 3 months in a row, while imports plunged 19.7% to US$37.5 billion posting a 60 month straight month of trade surplus but down sharply from the previous month. The steep decline in trade surplus came as a rise in imports outpaced that of exports in January on rising oil prices.
The recovery momentum for the South Korean economy has remained fragile as an upturn in exports and investment was offset by a slump in consumer sentiment and a drop in private consumption.
Consumer prices gained 2% in January, the highest on-year gain since October 2012. To make things worse, the composite consumer sentiment index for January came to 93.3, the lowest since March 2009.
South Korea’s job market remains tough for young people showing unemployment rate for young people, aged between 15 and 29, reached a record high of 9.8% in 2016 due mainly to the longstanding sluggishness of domestic economy.
The exchange rate for Canadian Dollar averaged at 895.50 won in January, 2017, up by 5.97% from 845.06 in January, 2016 and up by 1.15 % from 885.30 in one month earlier.
South Korea’s housing starts in 2016 slightly increased 2.9% to 115,161 buildings from a year earlier at 111,161 buildings. Housing permits in 2016 also increased 5.8% to 130,489 buildings from a year earlier at 123,362 buildings.
However, housing permits in number of units in 2016 dropped 5.1% to 726,048 units from a year earlier of 765,328 units, amid ongoing government intervention to limit the supply of new homes and mainly attributed to a sharp decrease in Seoul and its surrounding area.
The South Korean government began limiting the supply of new homes, especially new apartments in Seoul, in August 2016 as a way of limiting the rise in household debts, which reached a record high of 1,295.8 trillion won (US$1.11 trillion) as of the end of September 2016. In the first half of 2016, the number of new home permits issued had spiked 18.4% on-year, partly reflecting high demands for new homes but in the second half, the number plunged 20.3% from the same period in 2015.
While the whole construction sector struggles, the number of wood building permits and wood building starts in 2016 remarkably increased 10.7% to 17,043 buildings and 9.9% to 14,945 buildings, respectively, from a year earlier. Both total floor areas of wood building permits and starts in 2016 also increased to 14.6% and 14.8% to 1,504,695 m2 and 1,346,444 m2, respectively from a year earlier.
South Korea’s home transactions dropped 6.1% to 58,539 from a year earlier in January, 2017 as investors stayed cautious amid growing uncertainties at home and abroad. Industry experts attributed the decrease to people taking a wait-and-see attitude due to uncertainties and a government intervention in early November last year to limit the number of new homes, especially new apartments, to be built over the upcoming years.
BC softwood lumber export volume to South Korea in 2016 slightly decreased 0.3% to 268,790 cubic meters as compared to 269,521 cubic meters in 2015.
Export value in 2016 also decreased 2.8% to CAD$71.417 million as compared to CAD$73.505 million in 2015.