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South Korea’s exports maintained growth momentum in December as demand from China increased while semiconductor sales stayed resilient.
The value of shipments adjusted for working-day differences increased 4.3% from a year earlier in December, according to data released Wednesday by the trade ministry. That compared with a 3.7% rise initially reported for the full month of November.
Unadjusted exports rose 6.6% while overall imports increased by 3.3%, resulting in a trade surplus of $6.5 billion.
The up-tick offers some solace for a nation undergoing its biggest political upheaval in years. President Yoon Suk Yeol was impeached after shocking the nation by briefly declaring martial law on Dec. 3. His prime minister Han Duck-soo was also impeached for refusing to quickly appoint judges to deliberate on Yoon’s impeachment. Finance Minister Choi Sang-mok has now stepped in as the second acting president.
The turmoil has sent the won to its lowest level since 2009, while South Korea’s stock markets also remain fragile. A Jeju Air plane crash on Sunday that killed all but two of 181 people on board may further dent consumer sentiment.
South Korea, which relies heavily on exports to drive its economic growth, also faces external challenges. US President-elect Donald Trump has promised an array of protectionist policies, including universal tariffs, as he prepares to return to the White House.
What Bloomberg Economics Says...
“Chipmakers appear to be increasing shipments of high-bandwidth memory (HBM) chips to China before new US restrictions on the sale of high-tech memory chips to China kick in from January 2025.”
-Hyosung Kwon, economist
To read the report, click here
The Bank of Korea unexpectedly conducted back-to-back cuts to its benchmark interest rate in the fourth quarter to shore up the economy against trade headwinds. Governor Rhee Chang-yong sees the economy growing this year less than the 1.9% forecast previously.
Economists increasingly expect the central bank will go ahead with another cut this month as consumer and business confidence slump. Weaker export momentum poses a threat to the won, and the nation’s semiconductor industry may experience slower demand this year after enjoying a boom on artificial intelligence development.