South Korea July export growth fastest in 6 months on solid chip demand

By Jihoon Lee

SEOUL (Reuters) -South Korea's exports rose at the fastest pace in six months in July on strong chip sales but missed market expectations, trade data showed on Thursday, amid worries about a sustained recovery in China demand.

Overseas sales by Asia's fourth-largest economy rose 13.9% year-on-year to $57.49 billion, after a 5.1% rise the previous month and marking the fastest growth since January.

It was, however, weaker than an 18.4% increase tipped in a Reuters survey of economists.

Exports of semiconductors grew for the ninth consecutive month, rising 50.4%, along with gains across other IT products, but automobiles fell 9.1% due to earlier summer vacation periods at major auto firms.

By destination, exports to the United States rose for the 12th straight month, up 9.3%, while China-bound shipments jumped 14.9% to a 21-month high of $11.4 billion.

"Last month was somewhat disappointing, even after taking base effects into account," said Park Sang-hyun, chief economist at HI Investment Securities.

"Exports momentum is seen weakening. China will be key, but recent signs raise doubts over whether its economic recovery will be sustained."

China's manufacturing activity weakened in July as factories grappled with falling new orders and low prices, a survey showed on Wednesday, pointing to a grinding second half for the world's production powerhouse.

"Exports got off to a good start in the second half of the year," trade minister Ahn Duk-geun said, reaffirming the government's goal to achieve record-high exports this year.

Imports rose 10.5% in July to $53.88 billion, after a 7.5% decline in June. It was the fastest increase since September 2022, but slower than a gain of 13.4% expected by economists.

As a result, the country posted a trade surplus of $3.62 billion in July, narrower than the previous month's $7.99 billion, which was the biggest since September 2020.

(Reporting by Jihoon Lee; Editing by Jacqueline Wong, Shri Navaratnam and Sam Holmes)