South Korea’s exports extended this year’s surge last month as booming semiconductor demand continues to anchor growth, despite mounting risks from higher energy prices linked to the Iran turmoil.
The value of shipments adjusted for differences in the number of working days surged 48 percent from a year earlier, the trade ministry said yesterday. Unadjusted exports also rose 48 percent, compared with a revised 49.2 percent gain for the month of March. Imports increased 16.7 percent, resulting in a trade surplus of US$23.8 billion.
The data reinforce signs that South Korea’s export engine remains resilient for now, even as external risks intensify. The Iran conflict has pushed up oil prices, boosting import costs, and adding to inflation pressure in an economy heavily dependent on energy imports.
Photo: Bloomberg
For policymakers, the divergence between strong exports and growing cost pressures complicates the outlook. Higher oil prices and a weaker won are expected to lift inflation while weighing on growth, a challenge flagged by newly appointed Bank of Korea Governor Shin Hyun Song.
However, for now, it is the artificial intelligence (AI)-led boom in shipments that is proving to be the dominant economic force, as it is in Taiwan. Data from the nation on Thursday showed that the economy grew at its fastest since 1987 in the first quarter.
Semiconductors remained the primary driver of South Korea’s export growth, with US$31.9 billion in shipments. That was up 173 percent from a year earlier, following March’s record US$32.8 billion in exports, as sustained investment in AI and data centers underpinned demand.
Fuel exports also supported growth, reflecting higher crude prices.
By destination, exports to the US increased 54 percent, while the value of shipments to China climbed 62.5 percent.
In the first quarter of this year, GDP grew 1.7 percent, the fastest pace in more than five years. That marked a reversal from a contraction at the end of last year.
The strength in last month’s exports masks underlying vulnerabilities. Private consumption rose only modestly in the first three months of the year, while rising energy costs linked to the Iran conflict and a weaker won have added pressure on households and businesses. Policymakers are now grappling with a more complex trade-off as external demand from semiconductors remains resilient, but domestic sentiment weakens.
Import prices also surged sharply in March, underscoring how quickly external shocks are feeding into the domestic economy. That dynamic is likely to keep the central bank cautious as it assesses whether the inflationary impact proves temporary.
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