South Korean imports show strength as overall trade continues to contract
Trade in personal and household goods set to grow in Q3 while imports of basic raw materials will bolster air and ocean trade
South Korea's trade outlook retains some cause for optimism despite continued deceleration in both air and ocean trade, according to the latest data from the DHL Global Trade Barometer.
The DHL Global Trade Barometer, an early indicator of global trade developments calculated using artificial intelligence and big data, suggests that trade in personal and household goods will experience significant growth between June and August 2019, rising 15 points to an index of 89.
However, most other sectors continue to exhibit signs of ongoing trade weakness, with marked declines in both air and ocean exports expected, thus pulling down the overall trade outlook by 3 to an index value of 46. South Korea's air imports, on the other hand, look set to grow modestly thanks to rising trade in sectors like temperature or climate-controlled goods and basic raw materials - the latter of which is predicted to make positive contributions to the country's ocean imports.
"South Korea's high reliance on exports has rendered its economy particularly susceptible to the global downturn in trade, particularly as its key industries like semiconductors and technology have been acutely affected by recent trade disputes," says SP Song, managing director, DHL Global Forwarding Korea.
"The evolving nature of global trade disputes will likely dictate the course of South Korea's own trade growth in the coming months, with domestic demand aided by government stimulus measures and broader overseas diversification likely to yield opportunities for South Korean businesses looking for increasingly rare growth at home."
For the first time in six quarters, the barometer's results predict a slight decline in global trade between June and August 2019, with its overall world trade outlook dropping to just 48 index points.
Commenting on the latest forecast, Tim Scharwath, CEO of DHL Global Forwarding, Freight, says. "Amidst rising US-Chinese tensions, the slightly negative outlook for global trade for the third quarter of 2019 does not come as a complete surprise. The latest GTB clearly illustrates why trade disputes create no winners. Nevertheless, some major economies such as Germany continue to record positive trade growth. And from a year-to-date perspective, world trade growth has still been positive. Hence, we remain confident in our initial prognosis that 2019 will be a year with overall positive, but slower trade growth."
The continued trade disputes between the US and China have contributed significantly to that decline, with both countries experiencing the largest declines in their trade outlook (-11 points for the US, -7 points for China) out of all countries surveyed by the barometer. In the Global Trade Barometer methodology, an index value above 50 indicates positive growth, while values below 50 indicate contraction.
Scharwath says, "The GTB is a useful tool for us to anticipate economic developments at an early stage. We are well-prepared to tackle the forecasted developments. Our divisional structure and portfolio as well as our worldwide activities allow us to balance economic effects within the company and remain resilient to changes in global trade dynamics."
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9 Jul 2019