South Korea’s exports continued strong growth in the first 20 days of October, with chip exports surging by 222.5%

According to Zhihu Finance APP, driven by robust global demand for artificial intelligence (AI) boosting semiconductor shipments, South Korea’s exports for the first 20 days of October maintained strong growth, highlighting the resilience of the Korean economy as the Bank of Korea is set to announce its interest rate decision. Data released by the Korea Customs Service on Wednesday show that, after adjustment for differences in working days, exports for the first 20 days of October increased by 65.9% year-on-year. In contrast, the corresponding growth rate for September was 89.8%.

On an unadjusted basis, exports in the first 20 days of October grew by 105.4%, imports increased by 42.8%, and the trade surplus reached $14.5 billion. The total value of exports for the first 20 days of the month was $61.6 billion; after September’s export figure of $71.4 billion for the same period, the growth momentum continues.

Because this year’s Mid-Autumn Festival holiday fell in September while last year’s was in October, the year-on-year data show discrepancies. The figures adjusted for working days better reflect underlying trends.

The semiconductor industry remains the main engine of economic growth, with chip exports soaring 222.5% compared to the same period last year, reaching $27.5 billion. Exports of petroleum products rose by 68.3%, and automobile exports grew by nearly 41%.

It is worth noting that exports of South Korea’s semiconductors, automobiles, and batteries play a vital role in the global supply chain, so its export data is often seen as a “canary in the coal mine” reflecting global trade trends and the health of the economy.

These figures further indicate that the boom in the semiconductor sector is supporting South Korea’s economic growth, while also keeping inflation elevated. This data will also provide key economic indicators for the Bank of Korea’s rate decision on Thursday. Market consensus expects the Bank of Korea to keep rates unchanged, weighing the impact of recent rate hikes.

In August, the Bank of Korea raised its benchmark rate by 25 basis points to 3%, marking a second consecutive increase. Stronger-than-expected economic growth and persistently high inflation have prompted policymakers to take preemptive action. Bank of Korea Governor Rhee Chang-yong stated that the central bank will maintain a tight monetary policy stance until it is confident inflation will return to its 2% target level.

In September, South Korea’s overall inflation dropped to 2.9%, down from 3.1% a month earlier, but still clearly above the central bank’s target. Rhee Chang-yong has said that the Middle East war and the AI boom are intensifying inflationary pressures. Excluding volatile food and energy prices, September’s core inflation rate was 2.8%.

The robust performance of South Korea’s chip sector has boosted corporate profit and investment, but policymakers are still assessing how much these gains can be transmitted to household consumption and the broader domestic economy.

By export destination, South Korea’s exports to China surged by 154.4% in the first 20 days of October, and exports to the US rose by 154.9%; exports to Malaysia and Singapore grew by 363.2% and 121.1% respectively.