South Korea’s trade-reliant economy started 2024 on a positive note as exports rose for the fourth consecutive month. The surge in sales to China and the significant increase in chip shipments, the largest in six years, contributed to this boost.
January’s trade data indicated the favorable momentum, complemented by a national factory activity survey showing expansion for the first time in over 1-1/2 years due to improving demand in key export markets.
South Korea’s exports, driven by Asia’s fourth-largest economy, witnessed an 18.0% year-on-year increase to reach $54.69 billion in January. This remarkable growth surpassed the 5.0% rise seen in December and exceeded the 17.8% gain projected by economists in a Reuters poll.
The substantial percentage increase was partly attributed to a favorable comparison with the same period last year, which had fewer working days due to the timing of the Lunar New Year holidays.
DB Financial Investment economist Park Sung-woo commented, “Overall, South Korean exports are rebounding as expected, although there also are base effects from the first quarter of last year when semiconductor exports were the worst. It seems the worst is over for China-bound exports as well, with the outlook on the Chinese economy becoming brighter.”
South Korea’s exports, which had been in a year-long downturn, started to rebound in October and are anticipated to continue strengthening this year, playing a pivotal role in economic growth. While overseas shipments contributed to faster-than-expected economic growth in the final quarter of 2023, weakening domestic demand raised concerns about an uneven recovery.
Trade Minister Ahn Duk-geun expressed optimism, stating, “Exports are clearly showing a recovery trend.” He emphasized the government’s commitment to providing ongoing policy support to achieve record shipments in 2024.
The standout performer in January was semiconductor exports, which soared by 56.2%, marking the most significant increase since December 2017 and extending gains for a third consecutive month. This sector led the overall upturn in exports.
China-bound shipments saw a 16.1% increase, ending a 19-month streak of declines. Exports to the United States continued their sixth consecutive month of growth, rising by 26.9%, while exports to the European Union climbed 5.2%.
In contrast, imports decreased by 7.8% to $54.39 billion in January, following a 10.8% drop in December, slightly below economists’ expectations of a 7.6% decline. This marked the slowest pace of decline since March 2023.
The preliminary trade balance for January recorded a surplus of $0.30 billion, a notable decrease from the previous month’s surplus of $4.46 billion, which had been the largest in three years.