South Korean exports likely contracted, supporting BoK rate cut in June

A significant contraction in exports is anticipated in May, based on the interim numbers up to 20 May. Societe Generale forecasts exports to fall from USD46.2bn in April to USD40.5bn in May, which is a substantial decline even considering the fewer working days in May due to Labour Day,Children's Day and Buddha's Birthday. 

Imports are expected to decline from USD37.7bn in April to USD34.9bn, but this may just reflect the difference in working days between April andMay and would not point to a 'real' change in imports. The trade surplus is likely to decline, as the contraction in exports should be more pronounced than that of exports. Clear weakness in the May exports print would be bad for the Q2 GDP growth outlook and would support the base scenario of a BoK rate cut in June, says Sociate Generale.