As semiconductor demand continues to improve, South Korea's exports maintained growth momentum in January, setting up a positive start to 2024. Data released by South Korea Customs on Thursday showed that shipments, adjusted for working day differences, increased 5.7% year-on-year. Overall exports rose 18%, compared with economists' forecasts for growth of 17.6%, helped by more working days compared with the same period last year. Overall imports fell by 7.8%, and the trade surplus narrowed to US$300 million.


Although the holiday-adjusted export growth has slowed down from about 14% in December last year, a closer look shows that the market demand for South Korea's main products remains strong.

The biggest driver of the rebound in exports is memory chips. Customs said semiconductor exports increased 56.2% year-on-year in January, the largest increase since December 2017.

Economist Hyosung Kwon said, "The surge in South Korea's exports in January was due to an increase in the number of working days in the month compared with the same period last year. Even so, exports remained resilient after adjusting for this distortion."

KoreanMemory chip production ranks first in the world, so the global demand forStrong demand for memory chips bodes well for the overall economy. Samsung Electronics reported on Wednesday that its DRAM business was profitable despite a fourth consecutive quarter of decline in overall revenue. DRAM is a key component of Samsung Electronics' business.

"Export growth in electronics products from Taiwan and South Korea has been particularly strong in recent months," Citi Research analysts led by Johanna Chua wrote this week. "If the technology upcycle expands, its economic significance should be greater for Vietnam, Singapore and Malaysia."

Other industries driving South Korea's exports include automobiles, petrochemicals and shipbuilding, which underpin the country's broad industrial base. Many Korean products are found throughout the global supply chain, making South Korea's shipments a good leading indicator of the health of global trade.

The General Administration of Customs said vehicle shipments increased 24.8% year-on-year in January, marking the 19th consecutive month of growth. Exports of general machinery, household appliances, and computers all achieved double-digit growth.

South Korea's exports emerged from a year-long slump late last year, helping the economy grow at a steady 0.6% rate in the final three months of the year. This rebound has partly offset the negative impact of credit risks in the construction sector, promoting growth in line with the central bank's expectations.

The timing and speed of South Korea's export recovery this year will depend on a range of factors, including consumer demand in major countries from the United States to China, as well as global interest rate trends.

South Korea has always prided itself on being the most flexible in adapting to changing trade patterns and remains wary of any fallout from ongoing geopolitical flashpoints such as conflicts in the Middle East. A series of elections to be held in dozens of countries this year will also add to uncertainty about global trade policy.