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Exports jumped 27.2 percent last month from a year ago to US$39.49 billion, helping South Korea post its first monthly trade surplus in six months despite a sharp rise in crude and raw materials imports, the Ministry of Knowledge Economy said on Monday.
It was the fastest annual gain since August 2004 when exports increased 28.8 percent from a year earlier. Imports soared 28.8 percent to $38.45 in May, resulting in a trade surplus of $1.04 billion. It marked the first profit since November last year.
The Commerce Ministry attributed the brisk exports to a record surge in sales of ships as well as strong shipments of petroleum products, mobile phones and steel products.
Last month's ship exports jumped 56.0 percent on-year to reach an unprecedented US$4.9 billion, bolstered by the scheduled delivery of a floating production storage and offloading (FPSO) vessel to Nigeria, worth $1.3 billion. The oil platform was built by Hyundai Heavy Industries, the world's biggest shipbuilder.
“Ship exports in May hit a record surge on sales of FPSO, LNG (liquefied natural gas) carriers and crude vessels and large container ships," the ministry said in a press release. The country also delivered seven LNG carriers last month, which costs over $100 million each, it said.
Ship exports soared 22.8 percent year-on-year in the first quarter to US$10.3 billion, outpacing growth of the country’s total shipment growth of 19.7 percent. Auto exports gained 6 percent on-year in the first quarter, while shipments of semiconductor decreased 12 percent in the period.
South Korea is home to the world's leading shipbuilders, such as Daewoo Shipbuilding and Marine Engineering, which won a $1.4 billion deal last month to build two drill ships for an American shipper.
The shipyards expect to win more deals for oil and gas vessels this year as record-high oil prices encourage global oil developers to increase spending on crude production and economic growth in China and India increases demand for fuel.
The ministry said high oil prices have boosted the country’s exports of petroleum products. Exports of petroleum products jumped 118 percent on-year in May to $3.72 billion. The country's oil products shipments are expected to remain strong because of tight global supplies, it said.
South Korea imports almost all of its crude oil requirements, but exports back after refining crude into gasoline or diesel, reaping benefits from high oil prices. But rising crude prices have sharply boosted the country's imports, posing a major burden to the country's energy-intensive manufacturers.
The country imported 73 million barrels of crude in May, down 5.9 percent from a year earlier, but its bill soared 57.5 percent to US$8.1 billion. The average price of Dubai, the benchmark for South Korea's imports of Middle East oil, stood at $119.50 per barrel last month from $64.70 in May 2007.
Largely due to soaring oil costs, South Korea's current account deficit widened in April to US$1.56 billion, according to the central Bank of Korea. Asia's fourth-largest economy logged a current account shortfall for a fifth straight month, with the January deficit hitting an 11-year high.
The bank also said Monday that the country's economy expanded 0.8 percent in the first quarter from the previous quarter as robust exports offset slowing domestic demand and weak corporate spending. The first-quarter growth was half the 1.6 percent growth in the fourth quarter of 2007 and the slowest quarterly growth since the fourth quarter of 2006.
In another sign that could slow the economy, the country's consumer prices grew at the fastest pace in seven years in May on higher prices of energy and raw materials. The consumer price index jumped 4.9 percent last month from a year earlier, according to the National Statistical Office on Monday. May's annual inflation was the highest since a 5 percent gain in June 2001.
“The economy will slow down more sharply than expected in the second half," said Kwon Soon-woo, director at Samsung Economic Research Institute.
The biggest private think tank has revised down its forecast for gross domestic product growth in the second half to 3.8 percent from the initially expected 4.6 percent, citing inflationary pressure and energy import costs.
