South Korea’s exports continued to grow last month, helped by rising demand from the US, which overtook China as its biggest market for the first time in two decades.
The value of global shipments adjusted for working-day differences increased 14.5 percent from a year earlier, data released yesterday by the South Korean Ministry of Trade, Industry and Energy showed.
Headline exports rose 5.1 percent, compared with economists’ forecasts of a 3.7 percent increase, while overall imports declined 10.8 percent, resulting in a trade surplus of US$4.5 billion.
Photo: EPA-EFE
In a sign of closer ties with Washington and Beijing’s economic challenges, South Korea sold US$11.3 billion in goods to the US and US$10.9 billion to China last month.
However, one month’s data does not offer conclusive proof of an enduring shift in trading patterns.
China remains South Korea’s biggest trading partner by a large margin given the scale of Seoul’s imports from the world’s second-largest economy.
South Korea’s exports emerged from a year-long slump late last year after global demand for its products ranging from electronics and automobiles to petrochemicals and shipbuilding finally started to recover.
Semiconductor exports last month jumped 21.8 percent from a year earlier, as memorychip prices continued to rebound, the ministry said.
Prices are rising again on the back of demand for artificial intelligence and other emerging technologies. The impact on economic growth in South Korea and countries including Taiwan and Vietnam can be expected to be watched closely this year.
Demand for South Korean goods has generally been recovering across the world, indicating that consumers might be regaining confidence after a prolonged period of higher interest rates.
The South’s exports are expected to rise 7.9 percent this year, reaching US$680 billion, according to base-case forecasts by the Korea International Trade Association.
The association expects imports to rise 3.3 percent, with the trade surplus reaching US$14 billion.
Still, downside risks remain.
Bloomberg Economics last week forecast that global growth would lag to 2.7 percent this year from 3.1 percent, the slowest since 2001 excluding the global financial crisis in 2009 and the COVID-19 pandemic in 2020.
“Korean exports are still bottoming out and likely to start a weak recovery trend in 2024,” Pantheon Economics said in a note last month. “Global demand is still soft.”
Geopolitical tensions such as the Israel-Hamas war and growing protectionism add to risks for South Korea, while questions remain surrounding the health of the economic recovery in China.
China is also ramping up domestic production of goods as it moves up the value chain. One key area that it is focusing on is semiconductor and smartphone manufacturing, a development that has threatened market shares held by Samsung Electronics Co and other South Korean exporters.
Exports to China last month slid 2.9 percent from a year earlier, while shipments to the US rose 20.8 percent, the ministry said.
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