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January exports saw a double-digit growth, marking South Korea’s fourth consecutive month of rising exports.
 
China-bound exports showed recovery, as well as semiconductor exports. The government is assessing that exports, which have been sluggish, have now entered a recovery trend.
 
According to a report on January import and export trends released by the Ministry of Trade, Industry and Energy on Thursday, exports reached US$54.69 billion in January, an 18% increase from the same month in 2023.
 
This marks the fourth consecutive month of growth since October 2023, and the first double-digit increase in 20 months since May 2022, when export growth reached 21.4%.
 
Of Korea’s 15 major trade items, 13 saw increases in exports, with wireless communication devices and rechargeable batteries being the exception. Semiconductor exports increased for the third consecutive month, increasing 56.2% compared to 2023.
 
Most notably, exports of memory chips, which are the semiconductor industry’s biggest products, were up by 90.5% year over year. The increase in exports of high-bandwidth memory (HBM) for artificial intelligence and the increase in memory chip prices due to improved supply and demand seem to be the driving factors behind this surge in growth.
 
There was also a base effect of a 44.5% year-on-year plunge in semiconductor exports in January 2023. The export volume was slightly lower than that of the previous month.
 
Despite concerns about slowing demand for electric vehicles, automobile exports continued to be reliable, rising 24.8% from 2023, with electric vehicle exports going up by 15.8%.
 
Exports to China, which had been sluggish, showed signs of recovery for the first time in 20 months, with total exports amounting to US$10.7 billion in January, up 16.1% from 2023.
 
The rebound in exports to China seems to have been driven by an improving semiconductor industry, which accounts for the largest share of South Korea’s exports to the country.
 
Semiconductor exports to China began to rebound in October 2023, with January seeing a 35.3% growth in exports. In addition to semiconductors, exports of other goods such as display equipment, general-purpose machinery, and computers also showed double-digit growth. However, the trade balance with China in January was still in the red by US$1.7 billion.
 
South Korea’s imports totaled US$54.39 billion in January, down 7.8% from the same month in 2023. This was driven by a large drop (-16.3%) in a major import: energy.
 
This resulted in a trade surplus of US$300 million in January. The monthly trade balance has been in surplus for eight consecutive months, since June 2023.
 
The government is keeping an eye on the rebound in exports of its largest export product, semiconductors, and exports to China, its largest export market. Trade and Industry Minister Ahn Duk-geun analyzed the situation as being on the track to recovery.
 
South Korea has set its largest-ever export target of US$700 billion for 2024, while export companies are more cautious about this year’s prospects.
 
According to a survey of 150 large export companies by the Federation of Korean Industries, 73.3% of respondents predicted their exports would increase or stay the same this year, with most of those companies (41.3%) stating that they expect an increase of somewhere between 0% and 5%.
 
This suggests that a strong recovery from 2023’s export slump is highly unlikely.
 
Of those surveyed, 15.3% of companies expected a 5%-10% increase in exports, 7.3% expected a 10%-15% increase, 4.7% expected a 15%-20% increase, and 4.7% expected an increase of 20% and over.
 
Indeed, 26.7% of these exporters expected exports to decline this year, citing high commodity prices and slowdowns in major export markets such as the US and China as the main reasons.
 
By industry, automotive exports, bio-health, electronics, automobiles, and general machinery are expected to increase, while steel, petroleum products, and petrochemicals are expected to decline.
 
“While it does seem as if exports, mainly of semiconductors, are expected to improve in 2024, factors such as the delayed recovery of the Chinese economy and global supply chain jitters may act as downgrade factors,” assessed Lee Sang-ho, who heads up the federation’s economic and industrial policies division.

By Kim Hoe-seung, senior staff writer

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