It is a mixed bag when it comes to the economy of South Korea as of late. On one hand, job growth is rising at a faster than expected rate, which will help solve one of the more prominent issues that the country has been facing as of late. On the other hand, exports are falling drastically as the US-China trade war continues. This is particularly dismal news for the trade reliant South Korea.
South Korea added almost 250,000 jobs in May, but exports in the first 10 days of June were down 16.6 per cent, and a government official told Asia Times that he anticipates minus growth for the month.
Meanwhile, the central bank chief hinted at a shift in policy towards a rate cut as it looks likely that the government will have to revise down its GDP growth estimate for 2019, which currently stands at 2.6-2.7 per cent.
According to data released by the National Statistical Office, much of the jobs growth that South Korea has experienced can be credited to a growth in the service sector and government spending.
The number of newly employed workers increased by only 19,000 in January but experienced a massive boom in February, reaching approximately 263,000 people hired. March followed the trend with 250,000 hired. Concerns were raised in April when figures dipped to 171,000 before surging once more in May.
Average monthly job growth so far has exceeded the governments expectations, indicating Seoul many raise its forecast when it announces its policy direction for the second half.
“Employment appears to be out of last year’s weak trend, with the number of employed hovering above the original target of 150,000 for the fourth straight month”, the finance ministry said in a press release.
With regards to exports, according to the Korea customs service, the value of exports between June 1-10 was US$10.3 billion – a 16.6 per cent drop, year-on-year. Imports totalled $12.5 billion – a 10.8 per cent decrease year-on-year.
Shipments of semiconductors fell 30.8 per cent, according to Yonhap news agency, while exports to China and the United States – South Korea’s top two trading partners, but also the main antagonists in the trade war – declined 26.7 per cent and 7.6 per cent, respectively.
Even though Korea’s exports tend to trend higher at months’ end, as exporters wait to fill containers before shipping, these are bad numbers. A government official told Asia Times that overall export numbers are expected to decline for the month.
Future expectations may see the South Korean government revising down its growth forecast for the year. Said forecast currently stands at 2.6-2.7 per cent. The Bank of Korea’s more conservative forecast of 2.5 per cent now looks attainable only if the economy continues to grow by more than 1 per cent, month-on-month for the remaining three quarters.