South Korea’s trade index is falling below the growth benchmark, but falling air trade – largely due to a dampened semiconductor market – is set to be offset by its ocean trade over the next three months, says DHL.
The DHL Global Trade Barometer, an early indicator of global trade developments calculated using Artificial Intelligence and Big Data, revealed that South Korea’s trade outlook is set to decelerate to 49 points, below the threshold of 50 which indicates growth.
But it adds that the rising ocean freight numbers will help stabilise the country’s trade volumes amidst short-term volatility, according to data from the DHL Global Trade Barometer released by DHL.
Air imports, although down, will be sustained by domestic demand for machinery parts and temperature or climate controlled goods, while air exports will maintain a strong foundation thanks to overseas demand for basic raw materials, DHL says.
The outlook is more positive for ocean shipments, where trade in basic raw materials remains robust while imports of personal & household goods are forecast to flourish.
“With semiconductor prices falling and South Korea’s GDP growth steadying to 2.5 per cent this year, the results of this quarter’s index are not unexpected,” said SP Song, managing director, DHL Global Forwarding Korea.
“However, losses in semiconductor and components manufacturing have been offset by gains in industries like game makers, cosmetics firms, and retailers, with South Korean stocks recently rebounding amidst lingering growth concerns.
“This suggests that pessimism surrounding the country’s economic situation may have prematurely assumed the worst, with the macro factors dampening South Korea’s trade balances also unlikely to extend beyond the short-term,” Song adds.
Overall, the Barometer’s results also suggest that global trade growth looks set to slow down over the next three months, signaling only a slight growth. However, the top three nations with the highest indexes are all in Asia, namely India, Japan, and China.
Indices for all seven countries that constitute the Global Trade Barometer index – including the US, UK and Germany – are above 50 points except for South Korea. In the Global Trade Barometer methodology, an index value above 50 indicates positive growth, while values below 50 indicate contraction.
Launched in January 2018, the DHL Global Trade Barometer is an innovative and unique early indicator for the current state and future development of global trade. It is based on large amounts of logistics data that are evaluated with the help of artificial intelligence.
The indicator is published four times a year and the next release date is scheduled for June 2019.