Canada Wood Today | The Canada Wood Group

Korean Economy, Construction & Lumber Shipments

Tai Jeong

By Tai Jeong

Country Director, Canada Wood Korea

June 8, 2014

Economy Update

Marking the fastest on-year gain since the first quarter of 2011, the South Korean economy grew 0.9% in the first quarter of 2014 from three months earlier as exports of tech and petrochemical products gained ground.

As the South Korean economy is widely seen as on a recovery track, spurred by robust exports and improving domestic demand, the country’s 2014 growth forecast was recently revised up to 4% from 3.8%.

Exports climbed 1.7% on-quarter in the first quarter after rising 1.4% on-quarter in the previous quarter.

Both disposable income and consumption of South Korean households increased in the first quarter on-year. Thanks to improving labor market conditions that led to more employment, the income of households consisting of two members or more averaged 4.4 million won ($4,300) per month during the first quarter, up 5% from 4.2 million won a year earlier. Private spending rose 0.3% on-quarter in the first quarter of 2014 after advancing 0.6% in the fourth quarter of 2013.

The exchange rate for Canadian Dollar averaged at 949.94won in April, 2014, dropped 13.74 % from 1,101.26 in April, 2013 and down 1.44% from 963.86 one month earlier.

Housing Construction

Korean Housing Starts Summary and Market Condition:

South Korea’s housing starts in year-to-date March of 2014 increased 16.6% to 18,528 buildings from a year earlier 15,895 buildings while housing permits in the same period also increased 16.8% to 21,140 buildings.

These continuous rises in both housing starts and in the number of construction permits for new houses surly indicate that the country’s housing and real estate market is on a recovery path.

The number of wood building permits and wood building starts for the first three months in 2014 also increased 17.4% to 2,697 and 6.6% to 2,138 respectively compared with the same period in 2013.

Wood Building 2008 2009 2010 2011 Jan.-Mar. Jan.-Mar. (%)
2013 YTD 2014 YTD
Number of Permits 10,184 11,022 10,922 11,382 2,298 2,697 17.4
Number of Starts 8,191 9,503 9,558 10,159 2,005 2,138 6.6

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

Home sales continued to grow significantly in April, reflecting recovery signs in the country’s real estate market. The number of home transactions surged 16.6% from the same month last year to 92,691 in April. The growth in April was most visible in the capital area with the number of home transactions in Seoul and the metropolitan area surging 29.2% on-year to 43,002.

By type, transactions of apartment units grew 16.4% on-year to 64,536 with sales of detached housing units and row houses also surging 13.5% and 19.7%, respectively.

Lumber Shipments

BC softwood lumber export volume and value to South Korea for the first three months in 2014 dropped 32% to 38,478 cubic meters and 28.6% to CAD$10.211 million respectively as compared to 56,824 cubic meters and CAD$14.311 million for the same period in 2013.

This significant drop in softwood lumber expert volumes to South Korea was resulted by the huge drop in March coincided with the extended shutdown at Port Metro Vancouver during the period. And we all anticipate a return to trend volumes in the next reporting period.