South Korean exports have lost momentum so far this month, dimming this year’s outlook for an economy overshadowed by political turmoil and the potential impact of US President Donald Trump’s tariff plans.
The value of shipments adjusted for working-day differences decreased 2.7 percent from a year earlier for this month, data released yesterday by the customs office showed. That contrasts with a 7.7 percent rise initially reported for last month.
In headline figures distorted by more working days compared with last year, exports grew 16 percent, while overall imports increased 7.7 percent, resulting in a trade surplus of US$804 million. The Lunar New Year holidays came in January this year, whereas a year earlier they were in February.
Photo: Reuters
Exports to the US rose 16 percent and those to China increased 13.6 percent, according to customs data unadjusted for calendar differences.
Semiconductor shipments grew 22.1 percent, while automobile exports increased 40.3 percent.
Exports represent the biggest component of South Korea’s economy, led by shipments of semiconductors. A global rush to develop artificial intelligence technology has been a boon for companies such as SK Hynix Inc and Samsung Electronics Co that produce advanced memory chips.
Their outlook is turning increasingly gloomy after Trump unveiled a series of tax initiatives following his inauguration last month. The risk of a global trade war has become dangerously real after the president announced 25 percent levies on steel and aluminum imports that are to take effect next month, and reciprocal tariffs on numerous trading partners that are expected to hit in April.
“The uncertainty is extremely high and the primary cause is the impact of Trump’s tariff policies on [South] Korea’s export industries,” Korea Economic Research Institute researcher Lee Seung-suk said. “There are considerable concerns in sectors like steel and automobiles. Unless there are measures to ease the tariffs, a decline in exports this year seems inevitable.”
The trade risks add to concerns for an economy hamstrung by stagnant consumption and political turmoil that have weighed on consumer confidence. After suspended South Korean president Yoon Suk-yeol imposed martial law briefly in December last year, he was arrested on charges of insurrection, and the South Korean Constitutional Court is deliberating whether to finalize his ouster.
South Korea’s deputy trade minister visited Washington this week and asked the US to exclude his country from its tariff plans, a government statement said.
He highlighted a free-trade agreement in place between the two nations and stressed investments South Korea has made in the US, it said.
With headwinds for the economy intensifying, the Bank of Korea (BOK) last month cut its growth forecast for this year. The central bank’s board is set to meet for an interest rate decision next week. The BOK pivoted to an easing cycle with a rate cut in October last year and followed that with another reduction in November.
Weak export growth is a concern for the central bank given the economy’s heavy reliance on trade. South Korean companies are widely embedded across global supply chains, including automobiles, rechargeable batteries, shipbuilding and refined oil.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a