August 1, 2021

By Cynthia Kim

SEOUL (Reuters) – South Korea’s exports jumped in July as overseas demand for chips and biohealth products extended export growth to a ninth straight month, supporting an economic recovery facing headwinds from the worst COVID-19 outbreak yet.

Exports rose 29.6% in July from a year earlier, slowing from 39.8% in June on a fading base effect from last year’s slump. The July figure fell short of 30.2% growth predicted by analysts in a Reuters survey.

Imports soared 38.2% from a year earlier and compared to a 40.7% rise in June.

With consumer sentiment weakening at home due to tightened social distancing measures since mid-July, the Bank of Korea is counting on global demand to lead economic growth seen at 4% for this year.

While growth in exports was expected to slow, July exports of chips and biohealth products were brisk, gaining 39.6% and 27.2%, respectively.

Exports of petrochemical products also surged 59.5%, while cars and computers increased 12.3% and 26.4% respectively.

“Demand for main exports items across chips, cars and petrochemical products remains strong, as economic recovery is being led by advanced nations,” said Chun Kyu-yeon, Hana Financial Investment analyst.

“Having said that, the pace of growth will weaken on fading base effects, and some hiccups in supply chain is raising logistical costs also.”

South Korea is currently battling its worst COVID-19 outbreak with record numbers of cases per day in the past week. Tighter curbs were enacted to prevent spread of the coronavirus during South Korea’s peak summer holiday season.

(Reporting by Cynthia Kim; Editing by Cynthia Osterman)