South Korea’s export growth returned to a double-digit clip last month, an outcome that bodes well for the economic outlook and reflects the resilience of global demand for technology products.
Shipments that reflect working-day differences increased 13.7 percent from a year earlier, according to data released yesterday by the Korea Customs Service.
Without the adjustment, headline exports rose 11.4 percent while overall imports increased by 6 percent. The trade surplus came to US$3.8 billion.
Photo: EPA-EFE
Exports are the leading engine of South Korea’s economic growth, with semiconductors, cars and refined oil products among the key products that drive the overall performance. Authorities expect the nation’s economic growth to accelerate to the mid-2 percent range this year, thanks in part to a resurgence in global trade.
In particular, a global frenzy for artificial intelligence (AI) development has been a boon for South Korean chipmakers, including Samsung Electronics Co and SK Hynix Inc.
Last month, semiconductor exports rose 38.8 percent from a year earlier, according to yesterday’s data. South Korea accounts for the largest share of global memorychip sales.
Demand has been led by major economies such as the US, where Nvidia Corp has pioneered the development of AI chips, and where booming demand for electric vehicles has benefited South Korea’s carmakers. China has also been a major buyer of the country’s electronics and chips.
The US has at times outweighed China as a source of demand for South Korean products since late last year, marking a turning point in Seoul’s relations with its two largest trading partners.
South Korea has encouraged exporters to diversify their sales routes to reduce exposure to geopolitical risks stemming from simmering trade tensions between Washington and Beijing. China’s cloudy economic outlook creates another incentive.
“There are risks to increasing trade dependence on the United States, such as possible shocks to the financial, fiscal, and business environments,” Je Heon Kim, interim director at the Korea Economic Institute of America, said in a note.
“South Korea must prepare and manage these risks by continuing to diversify its trade and supply chain,” he said.
South Korea’s manufacturers are embedded across a wide array of global supply chains, and therefore their performance serves as a barometer of the vitality of world commerce.
The nation’s export performance has been a factor deterring South Korea’s central bank from making an early policy pivot.
While the US Federal Reserve is widely expected to start cutting interest rates this month, economists cautiously forecast the Bank of Korea would wait until next month or later to lower rates in a bid to address sluggish consumption.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
BRAVE NEW WORLD: Nvidia believes that AI would fuel a new industrial revolution and would ‘do whatever we can’ to guide US AI policy, CEO Jensen Huang said Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) on Tuesday said he is ready to meet US president-elect Donald Trump and offer his help to the incoming administration. “I’d be delighted to go see him and congratulate him, and do whatever we can to make this administration succeed,” Huang said in an interview with Bloomberg Television, adding that he has not been invited to visit Trump’s home base at Mar-a-Lago in Florida yet. As head of the world’s most valuable chipmaker, Huang has an opportunity to help steer the administration’s artificial intelligence (AI) policy at a moment of rapid change.
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
RSS