Semiconductors and China Lead Export Rebound... Government Expects Growth to Start Slow and End Strong

Recovery Trend After Semiconductor Bottom
Public Exports at $10 Billion for Three Consecutive Months

High Interest Rates and Middle East Pose Uncertainty Risks
Must Also Address High Inflation Uncertainties

(Photo for reference)

The main factors driving the export rebound last month were semiconductors and China. Semiconductor exports showed a recovery trend after hitting a low in the first quarter of this year, recording the lowest decline rate since August last year, while exports to China contributed to the export rebound by maintaining over $10 billion for three consecutive months.

According to the October trade report released by the Ministry of Trade, Industry and Energy on the 1st, semiconductor exports amounted to $8.94 billion, down 3.1% year-on-year. However, the decline has significantly narrowed recently. Semiconductor exports, which plunged 44.5% year-on-year in January, saw the decline rate shrink to -28.8% in June, -13.6% in September, and recorded around -3% last month.

Kim Wanki, Director of the Trade and Investment Office at the Ministry of Trade, Industry and Energy, said, "Semiconductor exports have continued a recovery trend since the first quarter low (-40%) this year, with -34.8% in the second quarter and -22.6% in the third quarter. The supply-demand improvement is expected to accelerate due to the visible effects of memory production cuts and the expanding demand for high value-added products for new smartphones and AI servers." He added, "In October, both spot and fixed prices rose, improving price conditions, so the export improvement trend is expected to gradually expand going forward."

Supported by the improvement in semiconductor exports, exports to China, Korea's largest export market, reached $11 billion last month, maintaining export performance above $10 billion for three consecutive months. The decline rate of semiconductor exports to China narrowed from 44.6% in the first quarter to 34.8% in the third quarter, and to 2.9% based on data from October 1 to 25.

Exports to the United States also achieved positive growth for three consecutive months, supported by strong exports of key items such as automobiles, general machinery, and wireless communication, with semiconductor and auto parts exports turning positive. Last month’s export value was $10.1 billion, the highest ever for October. Exports to ASEAN ($10.6 billion) also turned positive for the first time in 13 months, supported by significant increases in major items such as ships and products, contributing to the export rebound.

With exports turning positive, the trade balance recorded a surplus of $1.64 billion, maintaining a surplus trend for five consecutive months. The export turnaround was driven by record-high exports of petroleum products, ships, displays, wireless communication devices, and exports to China, while the overall import decline (-9.7%) was due to reduced energy imports.

The government expects the export rebound to lead Korea’s economy to a "low in the first half, high in the second half" growth pattern. Moon Sang-gyu, Minister of Trade, Industry and Energy, stated, "We will make every effort to sustain the upward momentum of exports through the end of the year after crossing the golden cross." He added, "We will promptly resolve the three major field difficulties faced by export companies?finance, marketing, and overseas certification?and quickly prepare a 'short-term export expansion strategy' that brings tangible export growth effects, which will be announced at the 2nd Public-Private Joint Export Expansion Meeting on the 8th."

However, global high interest rates, US-China competition and supply chain restructuring, the Israel-Hamas conflict, and high oil prices still pose potential challenges to Korea’s exports. Kang Insu, Professor of Economics at Sookmyung Women’s University, said, "Since the US-China summit will be held at the Asia-Pacific Economic Cooperation (APEC) meeting in San Francisco next month, easing tensions between the two countries will positively affect our exports." He added, "However, given the Hamas conflict, high interest rates, and high inflation, uncertainties remain high, so thorough responses to risk factors are necessary."

This content was produced with the assistance of AI translation services.