SEOUL: South Korea’s exports extended their strong run in June, highlighting the durability of the semiconductor boom that’s underpinning growth.
Exports adjusted for working-day differences climbed 59.5% in June from a year earlier, the customs office said yesterday.
Imports increased 30.1%, resulting in a trade surplus of US$36.1bil.
On an unadjusted basis, shipments increased 70.9%, compared with a revised 53.4% advance for the full month of May.
Semiconductors again led gains, supported by robust investment tied to artificial intelligence (AI) and data centres.
Chip shipments surged 199.5% from a year earlier to US$44.8bil.
Exports of computer-related products and petroleum products also increased 308.8% and 49.8%, respectively.
“We’re likely to see a similar pace of export growth in the second half, with the third quarter looking even stronger as Nvidia’s Vera Rubin chips enter mass production and the ramp-up gets underway,” said Jeong-Woo Park, an economist at Nomura Holdings Inc.
“Overall, I expect semiconductor shipment growth and overall export growth to remain broadly in line with what we’re seeing now,” said Jeong-Woo.
The data support the Bank of Korea’s (BoK) increasingly hawkish stance.
Policymakers have argued that stronger growth, persistent inflation, a weak currency and soaring home prices are increasingly pointing toward higher interest rates.
Policymakers next set rates on July 16.
Governor Shin Hyun Song has said the semiconductor boom is spilling into broader consumption, investment and wage growth, raising the risk that inflation pressures could become more entrenched.
Bloomberg economist Hyosung Kwon said this should give the BoK more confidence in the growth outlook as it gears up for rate hikes.
“We expect the central bank to start tightening on July 16 with a 25-basis-point hike. Three more increases should lift the policy rate to 3.5% by the first half of financial year 2027, from 2.5% currently.”
Consumer inflation accelerated to the fastest pace in more than two years in May as the impact from the Middle East conflict rippled across the economy.
Core inflation, which strips out volatile food and energy prices, also rose 2.5%, suggesting that underlying price pressures are beginning to broaden alongside higher headline inflation.
Still, not all industries are booming, with the Iran War pushing up the cost of raw materials and weighing on some manufacturers. The nation’s purchasing managers’ index (PMI) eased to 52.1 in June, from 54.8 in May.
The trade and PMI figures came days after the government unveiled a sweeping semiconductor investment plan.
The Lee Jae Myung administration plans to orchestrate at least 1,350 trillion won (US$880bil) in investment from Samsung Electronics Co, SK Hynix Inc and other firms for chip manufacturing and AI data centres, aiming to double memory chip production capacity within five years.
The investment plan represents one of the world’s largest government-backed technology pushes, as South Korea seeks to stay ahead in memory chips while competing with the United States and China to expand AI infrastructure.
Nomura’s Park said it’s too early to incorporate the proposed investment plan into forecasts because Samsung and SK Hynix have yet to specify investment amounts or announce when projects would begin.
He added that the companies have said in filings that investment decisions would depend on business conditions and still require board approval.
By destination, exports to China rose 92.1%, while shipments to the United States increased 78.6%.
Exports to Asean also remained strong, reflecting continued AI-related demand across Asia. — Bloomberg
