S Korea's trade surplus in industrial parts widens in H1

South Korea's trade surplus in industrial parts and materials widened despite a slight drop in exports in the first six months of the year as the country's imports declined at a greater pace, the government said Thursday. In the January-June period, the country posted a trade surplus of US$43.3 billion in the sector, up 8.4% from $39.3 billion for the same period last year, according to the Ministry of Knowledge Economy. The tally is more than four times higher than a $10.74 billion surplus the country posted in overall trade in the first half of the year, meaning the parts and materials industry had made up for a significant part of losses by other industrial sectors, according to South Korea's news agency (Yonhap). The overall trade volume of industrial parts and materials shrank from a year earlier as its exports dropped 1.1% on-year to $123.8 billion with imports falling 5.6% to $80.6 billion. The ministry attributed the drops in both exports and imports to a slowdown of the global economy. "Exports dropped 1.1% from the same period last year due to a global economic downturn brought on by Europe's financial crisis and also the country's shrinking exports to China," it said in a press release. Shipments of industrial parts and materials to China dropped 6.6% on-year to $40.5 billion due to what the ministry called "China's shrinking domestic demand" prompted by an economic slowdown. Exports to the United States, on the other hand, surged 10.5% on-year to $11.71 billion, an outcome of the Korea-US free trade agreement (FTA) that went into effect on March 15, the ministry said. South Korea's chronic trade deficit with Japan narrowed in the first half to $10.8 billion from $11.7 billion last year with its exports and imports to and from Japan dropping 7.9% and 7.8%, respectively.