Pedestrians cross the street in front of the Samsung Electronics Co. headquarters in Seoul, South Korea, on Friday, June 28, 2024. Photographer: Jean Chung/Bloomberg
Seoul: South Korea’s export growth accelerated last month, reflecting resilience in global demand as the artificial intelligence (AI) and technology sectors drive gains.
Average daily shipments increased 12.4% from a year earlier, according to data released yesterday by the customs office.
Headline exports, which don’t reflect differences in the number of working days compared with a year earlier, rose 5.1% while overall imports decreased by 7.5%. The trade surplus came to US$8bil.
Trade is a key engine for South Korea’s economy, with manufacturers relying on exports to drive growth while companies and consumers depend on imports for products ranging from basic materials and oil to food.
Technology is a cornerstone of the nation’s export industries. Semiconductors and rechargeable batteries have led a recent expansion in shipments as global demand for AI and electric cars soars.
Semiconductor shipments amounted to US$13.4bil, rising 50.9% from a year earlier in June, the Trade Ministry said in a statement.
That marks the biggest export sales tally on record, it said.
South Korea is rolling out a series of initiatives to boost the flexibility of local industries dependent on imports to produce high-tech products.
With growing geopolitical tensions, the country is focusing on boosting supply-chain resilience to build a buffer against unexpected disruptions to global commerce.
The government is also encouraging exporters to diversify their sales routes. South Korean exporters are among the most dependent on China for demand at a time when the world’s second-largest economy is struggling to rebound from an economic slump.
Beijing is also attempting to ensure that more of its domestic industries can sustain themselves without reliance on imports.
Strength in the US economy, meanwhile, has been a boon for South Korean exporters, including Samsung Electronics Co, as American companies such as Nvidia increase their orders.
The United States has at times outweighed China in recent months in demand for South Korean products, marking a turning point in Seoul’s trade relations with its two biggest trading partners.
While South Korea exports less to China, its import dependence remains “structurally high”, making it difficult for Seoul to reduce its reliance on China within its manufacturing supply chains, according to Citigroup economists Jin-Wook Kim and Jiuk Choi.
South Korean companies, such as SK Hynix Inc, still operate key factories in China, sourcing their materials from local vendors.
That’s a concern for US policymakers who want to squeeze the flow of advanced technology into China. — Bloomberg
