South Korea’s early September exports show growth momentum continuing

SEOUL - South Korea’s export growth has stayed strong so far in September, preliminary trade data showed on Sept 23, underscoring the robust external demand driving the economy.

The value of exports accounting for working-day differences rose 18 per cent from a year earlier in the first 20 days of September, according to data released by the customs office.

Unadjusted for holidays, shipments edged down 1.1 per cent, while imports also decreased by 4.5 per cent from a year earlier. The trade surplus amounted to US$800 million (S$1.03 billion).

South Korea’s Chuseok holidays took place during the early part of September in 2024, causing the larger-than-usual discrepancy between the adjusted and unadjusted figures.

Shipments of semiconductors, the most lucrative component of the nation’s exports, increased 26.2 per cent from a year earlier in unadjusted terms, the customs office data showed.

As it is home to two of the world’s biggest memory-chip makers, Samsung Electronics and SK Hynix, South Korea has been riding the wave of global demand for artificial intelligence development along with Taiwan by exporting large quantities of advanced semiconductors to the United States and other developed nations.

Other South Korean companies also play an integral role in a wide range of global supply chains, especially in industries involving cars and batteries.

The South Korean government is now seeking to help the nation’s builders and general contractors ramp up their earnings from overseas infrastructure projects by promoting their technical expertise in building ports, roads and bridges.

The export rally in 2024 has helped fuel optimism, with the government projecting that economic growth will likely accelerate. It has also backed the Bank of Korea’s (BOK) view that it can afford to continue its campaign to prevent debt bubbles by keeping its benchmark interest rate at levels it considers restrictive.

The BOK may change that stance when it meets in October. Most economists expect the central bank to cut its benchmark interest rate to 3.25 per cent from 3.5 per cent, a level it has maintained since early 2023. 

The US Federal Reserve last week proceeded with a long-awaited policy pivot, cutting its key rate by 50 basis points.

A strong US economy has helped offset flagging demand for South Korean products in China, which has yet to recover fully from a housing slump that weighed on consumer activity. Extreme weather added to those woes over the summer.

In unadjusted terms, South Korea’s exports to China grew by 2.7 per cent from a year earlier, the 20-day trade data showed, while shipments to the US fell 5.9 per cent and those to the European Union decreased 15.1 per cent.

The three regions made up 49 per cent of all destinations for South Korean products. BLOOMBERG