South Korea’s Exports Surge

Early trade data from South Korea shows a significant increase in exports, suggesting a potential acceleration in the country’s economic growth, Bloomberg News reported on Tuesday.

According to figures from the customs office, exports jumped by 17.7% in the first 20 days of May compared to the same period last year. This surge is attributed to recovering global demand and strong performance in key sectors, particularly semiconductors.

The robust export performance is expected to prompt an upward revision of South Korea’s annual economic growth forecast. After a better-than-expected 1.3% expansion in the first quarter, analysts anticipate the Bank of Korea will raise its growth projection from the current 2.1%.

Semiconductor exports, a major component of South Korea’s economy, saw a notable increase of 45.5% in the first 20 days of May compared to last year. This growth is driven by high demand from smartphone manufacturers, data centre operators, and artificial intelligence developers.

However, not all sectors experienced growth. There were declines in car sales and wireless communications device exports. While exports to the United States and China showed modest gains, shipments to the European Union declined, highlighting the need for market diversification to reduce dependency on specific regions.

Analysts expect the trade surplus for May to widen, reflecting sustained export momentum. Despite the positive outlook, risks to South Korea’s economic growth remain. Concerns include credit issues in the real estate sector, uncertainties surrounding China’s economic recovery, and fluctuating exchange rates, which impact exporters’ earnings and debt burdens.

Independent economist Lim Dong-min emphasised the dual impact of exchange rate dynamics on exporters, adding to the overall uncertainty.

South Korean firms, deeply integrated into global supply chains, must manage these external risks proactively to maintain economic stability.