South Korea export momentum sustained on electronics demand

South Korean exports driven by gains in electronics have continued to grow so far this month, supporting the view that trade can regain strength this year and help prop up economic growth.

The value of shipments adjusted for working-day differences increased 9.9% from a year earlier in the first 20 days of February, according to data released Wednesday by the customs office. 

The timing of the lunar new year holidays in February this year skewed year-on-year comparisons, pushing down the headline export figure by 7.8% while overall imports decreased by 19.2%. The trade shortfall came to $1.2 billion.

South Korea is one of the world’s largest exporters, with a wide range of goods it ships to consumers and supply chains around the globe. As a result, the country’s export trends serve as a useful indicator for the health of the global economy and the tech sector.

Global demand for chips and electronics has held steady in recent months, supporting economic recoveries in South Korea and its Asian peers. Memory-chip prices in particular have begun to rebound thanks to resurgent demand for smartphones, artificial intelligence and other technologies.

Semiconductor exports jumped 39.1% from a year earlier in the first 20 days of February while most other categories posted declines largely caused by fewer working days. Automobile exports fell 23.3% and the shipments of steel products declined by 16.8% among others, the data showed.

As a result, the share of semiconductors in South Korean exports rose 5.8 percentage points to 17.2%, the customs office said. Separately, equipment for manufacturing semiconductors also sold 3.8% more than a year earlier. Exports of consumer appliances also rose 6.6%.

The Export-Import Bank of Korea expects the value of overall shipments to increase up to 9% from a year earlier in the first quarter. It mainly pointed to semiconductor demand fueling exports.

Still, geopolitical risks including conflicts in the Middle East could start to weigh on exports should they escalate, the bank said in a report earlier this month. Economic woes in China also threaten the outlook for South Korea’s trade, it said.

South Korea’s exports to China were only $120 million bigger than those to the US in the first 20 days of this month, the office said. Still, imports from China remained twice as big as those from the US, totaling about $6.6 billion, it said.