South Korea’s exports returned to growth on the back of continuing demand for semiconductors, in a positive sign for policymakers seeking to shore up the trade-reliant economy against any potential headwinds from US president-elect Donald Trump’s tariff plans.
Exports adjusted for working-day differences rose 3.6 percent last month from a year earlier, rebounding from a dip in the prior month, data from the South Korean Ministry of Trade, Industry and Energy showed yesterday. Headline exports climbed 1.4 percent while imports decreased 2.4 percent, resulting in a trade surplus of US$5.6 billion.
Semiconductor exports increased 30.8 percent from a year earlier to US$12.5 billion, the trade ministry said. Still, it was the slowest growth since late last year.
Photo: REUTERS
South Korea is one of the world’s most export-reliant nations, and its vulnerability to protectionism has raised concerns among policymakers and business leaders in Seoul after Trump vowed to increase tariffs on trading partners.
While South Korea might be subjected to universal tariffs of just 10 percent, it could also sustain indirect damage from larger duties targeting some of its key trading partners. Trump has pledged 60 percent charges for China, South Korea’s biggest trading partner.
The Bank of Korea on Thursday slashed its benchmark interest rate in a surprise back-to-back move aimed at girding the economy for any potential headwinds stemming from Trump’s return to the White House next month.
The central bank has already voiced concerns about a softening in the export growth of technology products. South Korea is home to two of the world’s biggest memory chip manufacturers, and its businesses are widely embedded across global technology supply chains.
“Trump’s return to the White House suggests a tumultuous period lies ahead, with higher US tariffs and fresh US-China trade frictions impairing the smooth flow of goods and the functioning of supply chains,” Dave Chia, an associate economist at Moody’s Analytics, said in a note. “As a key US and China trading partner, South Korea could be caught in the middle.”
Demand from both China and the US slipped last month. Shipments to China edged down 0.6 percent from a year earlier while those to the US fell 5.1 percent, the trade ministry said.
Separately, South Korea has the capacity to purchase more US energy, which is competitive in cost with Middle East imports, Yonhap News yesterday cited Minister of Trade, Industry and Energy Ahn Duk-geun as saying.
Ahn told Yonhap that the country needs to expand US imports to reduce trade surplus with the US and plans to fold it into policy “constructively,” while private companies can take it into consideration as part of their business strategies.
The minister’s comments suggest South Korea will seek to encourage US energy imports through government-run firms and private refiners, Yonhap said. US gas and oil prices are “reasonable,” making it easier for South Korea to procure them, Ahn told Yonhap.
During Trump's election campaign, he vowed to narrow trade deficits with other countries through tariffs and increase US oil and gas production to establish what he called energy dominance.
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