Middle East crisis has no impact; South Korea's export momentum remains strong in early April, with chip exports surging by 182.5%.

South Korea’s exports continued their strong momentum in early April, with explosive growth in semiconductor demand as the core driver, showing that external demand remains robust enough to withstand potential pressures from rising oil prices and currency depreciation.

On April 21, data released by Korean customs showed that from April 1 to April 20, South Korea’s exports increased by 49.4% year-on-year, and the rise, adjusted for working day differences, was also 49.4%, higher than the 40.4% growth seen in the same period of March. Total export value reached $50.4 billion, marking the highest record for the same period in history, surpassing the previous high of $36.4 billion set in April 2022.

Driven by a surge in investment in artificial intelligence and data centers, semiconductor exports soared 182.5% to $18.3 billion, raising the proportion of semiconductors in total exports by 17.1 percentage points to 36.3% compared to the same period last year, also setting a new historical record for the period. Meanwhile, imports increased 17.7% to $39.9 billion, resulting in a trade surplus of $10.4 billion.

It is worth noting that crude oil imports have risen year-on-year for the third consecutive month. The ongoing tensions in the Middle East have pushed international oil prices higher, and the rise in energy costs is bringing uncertainty to Korea’s inflation and economic growth prospects.

Semiconductors and Computer Equipment Lead Export Growth

Semiconductors are the main engine of this round of strong exports.

Data indicates that in the first 20 days of April, semiconductor exports soared 182.5% year-on-year, totaling $18.3 billion, with their share in overall exports rising to 36.3%. Computer peripheral equipment exports grew even more dramatically, surging 399% year-on-year to $2.2 billion, reflecting strong global demand for data center infrastructure.

Petroleum product exports increased 48.4% to $3.2 billion, ship exports rose 76.6% to $1.8 billion, and steel exports grew 8.6% to $2.6 billion, all recording substantial gains.

Automobiles and parts were among the few categories showing weakness. Passenger car exports fell 14.1% to $3.1 billion, automobile parts exports dropped 8.8% to $1.1 billion, forming a stark contrast against the overall export strength.

Looking at export and import destinations, all major markets recorded significant growth. Exports to China grew 70.9% to $11.2 billion, exports to the US rose 51.7% to $9.3 billion, and exports to Vietnam increased 79.2% to $5.5 billion. Combined, China, the US, and Vietnam accounted for 51.8% of total exports. Exports to Japan grew 40.7% to $2.1 billion, exports to the EU rose 10.5% to $4.4 billion, with growth rates relatively moderate.

On imports, those from China, the US, and the EU increased by 29.3%, 31.5%, and 25.5%, respectively, while imports from Japan fell slightly by 1.6%.

Energy Imports Continue to Climb, Oil Price Risks Not to Be Ignored

Despite impressive export figures, rising energy costs remain a potential concern.

In the first 20 days of April, crude oil imports grew 13.1% to $4.8 billion, marking the third consecutive month of year-on-year growth, amidst the backdrop of the ongoing Middle East crisis driving up international oil prices.

Energy imports, including crude oil, natural gas, and coal, grew overall by 6.8%. The combined effects of rising oil prices and depreciating won may push import costs higher, exerting pressure on domestic inflation and potentially eroding corporate profit margins. This risk warrants ongoing attention.

Meanwhile, data also show semiconductor imports increased 58.3%, and imports of semiconductor manufacturing equipment grew 63.3%, indicating that Korean companies are continuing to ramp up investment in the chip supply chain.

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