South Korea exports grow in sign of momentum for 2024

SEOUL – The growth in South Korean exports picked up in December, marking a robust finish to 2023 and adding optimism to the outlook for economic growth in 2024.

The value of shipments adjusted for working-day differences increased 14.5 per cent from a year earlier, according to data released on Jan 1 by the Trade Ministry. Headline exports rose 5.1 per cent, compared with economists’ forecasts for a 3.7 per cent increase. Overall imports declined by 10.8 per cent, resulting in a trade surplus of US$4.5 billion (S$5.9 billion).

South Korea’s exports emerged from a year-long slump late in 2023 after global demand for its products ranging from electronics and automobiles to petrochemicals and shipbuilding finally started to recover.

A focus in 2024 will be the extent to which demand for chips kicks in to support economic growth in South Korea and regional neighbours including Taiwan and Vietnam.

South Korea’s chip exports returned to growth in November after more than a year of declines. Memory-chip prices are starting to rise again on the back of demand for artificial intelligence and other emerging technologies.

Periods in which semiconductor exports increased have stretched for 28 months on average in the past, according to a report by the Bank of Korea. The central bank highlighted private forecasts indicating consumers will resume upgrading their smartphones in 2024.

South Korea is a major player in international trade. Demand for its goods has been generally recovering across the world, indicating consumers may be regaining confidence gradually after a prolonged period of higher interest rates.

South Korea’s exports will probably rise by 7.9 per cent in 2024, reaching US$680 billion, according to base-case forecasts by the Korea International Trade Association. The association expects imports to increase 3.3 per cent, with the trade surplus reaching US$14 billion.

Still, downside risks remain. It’s unclear how fast Korean exports can grow as the global economy slows this year. Bloomberg Economics forecast last week that global growth will slow to 2.7 per cent in 2024 from 3.1 per cent, the slowest since 2001 excluding the global financial crisis in 2009 and the Covid-19 pandemic in 2020.

Pantheon Economics said in a December note: “Korean exports are still bottoming out and likely to start a weak recovery trend in 2024.

“Global demand is still soft.” BLOOMBERG

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