SEOUL: South Korea witnessed a surge in export growth last month, signaling the potential for sustained economic momentum following a faster-than-expected expansion in the previous quarter.
Adjusted for working-day differences, shipments increased by 11.3% compared to the previous year, as per data released by the customs office yesterday.
Unadjusted figures showed headline exports rose by 13.8%, with overall imports also experiencing a 5.4% increase, resulting in a trade surplus of US$1.5 billion.
South Korea, a significant player in global trade, has seen demand for its goods rebound since late last year. The economy expanded by 1.3% in the first quarter, surpassing even the most optimistic estimates, largely driven by exports.
Despite ongoing Middle East tensions and elevated global interest rates, semiconductor sales have seen a resurgence. Major companies like SK Hynix Inc and Samsung Electronics Co have reported better-than-expected earnings, benefiting from increased demand for memory chips.
“Export growth is expected to continue driving growth this quarter, especially fueled by strong demand for semiconductors,” noted Dave Chia, an associate economist at Moody’s Analytics, prior to the release of trade figures.
South Korean exporters have particularly benefited from robust demand in major economies like the United States. The International Monetary Fund predicts a growth pickup in advanced economies this year, while emerging markets may experience a slight slowdown.
“While Asian exports, especially semiconductors, are likely to remain robust, caution is warranted regarding the broader outlook for external demand,” said Sheana Yue, an economist at Oxford Economics.
A major concern for policymakers is the weakening value of the won against the US dollar. While some companies like Hyundai Motor Co have seen improved earnings due to this, smaller firms and importers are grappling with higher costs of raw materials and energy.
Additionally, the outlook for demand from China remains uncertain. The second-largest economy is struggling to recover from a domestic spending slump, as highlighted by a surprise decline in industrial profits in March.
Exports to China in April totaled US$10.5 billion, marking a 9.9% increase from the previous year, while exports to the United States amounted to US$11.4 billion, a 24% rise, according to the Trade Ministry. — BLOOMBERG
