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.
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