South Korea’s early exports show recovery momentum picks up

South Korea’s early trade data indicated that export growth momentum will carry through the end of the year, adding to optimism for the 2024 economic outlook.

Exports rose 13% in the first 20 days of December from a year earlier, the customs office reported Thursday. Chip exports increased 19.2%, while shipments of all products to China edged down 0.4%.

The report, closely watched as an early indicator of global commerce, backs the view among Korean policymakers that exports will drive an acceleration in economic growth to more than 2% next year.

Global demand for chips at the heart of the economies for South Korean and some of its regional peers has held steady, supporting economic recoveries. Semiconductor prices are starting to rebound thanks to resurgent demand for smartphones, artificial intelligence and other technologies.

“Idiosyncratic AI-related demand should help boost tech exports from Korea and Taiwan with positive domestic spillovers,” Goldman Sachs economists led by Goohoon Kwon wrote in their outlook for 2024 trade.

Still, the recovery in South Korean trade could be a little patchy. Shipments to the US have been robust, while those to China have been slow to bounce back, the Bank of Korea said in a note earlier this month. Higher interest rates and China’s real estate market situation are among factors that will influence the trajectory of South Korean exports, it said.

Leading the bounceback in Korean exports has been chip demand. Last month semiconductor shipments rose from a year earlier for the first time in more than a year and memory-chip prices are starting to bottom out. The share of chips in overall exports edged up to 17.6% in December, the customs office said.

Automobile exports showed continued strength, rising 27.7% from a year earlier in the first 20 days of December. Oil products increased 10.4%. Meanwhile, exports of automobile parts dropped 5.5% and those of computer accessories slid 9.5%, the customs office said.

Shipments to the US rose 30.2% while those to Vietnam, where Samsung Electronics Co. operates a major smartphone factory, increased by 13.8%. Exports to the European Union fell 16.8%, the office said.

Overall imports decreased 9.2% with the trade surplus reaching $1.6 billion for the first 20 days of the month, it said.