(April 1): South Korea’s exports continued to surge in March as robust semiconductor demand helped cushion the economy, even as external risks intensify amid the war in Iran.
The value of shipments adjusted for differences in the number of working days soared 41.9% from a year earlier, according to data released by the trade ministry. Unadjusted exports rose 48.3%, compared with a revised 28.7% gain for the full month of February, while imports increased 13.2%, resulting in a trade surplus of US$25.74 billion.
Semiconductors continued to drive the overall increase, setting a fresh record of US$32.8 billion in chip shipments. That was a 151.4% jump from a year earlier, supported by sustained global investment in artificial intelligence and data centres. Shipments of autos, petroleum products and computers also increased, the trade ministry said in a statement.
The value of oil product exports surged nearly 55% as a sharp rise in crude costs triggered by the Middle East conflict lifted prices. Still, shipments declined after export controls took effect from March 13, with exports of gasoline, diesel and kerosene falling about 5%, 11% and 12%, respectively, from a year earlier, according to the trade ministry.
Petrochemical exports rose a more modest 5.8% as higher oil prices were only partially passed through to product prices. In the fourth week of March, when the impact of the conflict intensified, export volumes posted a sharp year-on-year decline, while March shipments of naphtha, which also became subject to export restrictions, plunged 22%.
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The data suggest South Korea’s export engine remains intact for the time being, despite mounting headwinds from surging energy prices and geopolitical uncertainty. The Iran conflict has pushed up crude oil prices, raising import bills and adding to inflation risks in an economy heavily reliant on overseas energy supplies.
In a bid to soften the secondary impact on the economy from the Middle East crisis, President Lee Jae Myung’s government has already proposed an extra budget of 26.2 trillion won (US$17 billion) to support consumers and companies, including measures to mitigate high fuel costs and aid to low-income households and small business owners.
For now the ongoing resilience in exports may support the Bank of Korea’s (BOK) cautious policy stance, as policymakers balance still-solid external demand against rising financial stability risks. The central bank said last month that the financial system remains broadly stable, but warned that escalating tensions stemming from the Iran conflict could trigger volatility in currency and asset markets.
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BOK board member Lee Soohyung flagged the risk that higher energy costs could lift inflation, while uneven growth and tighter funding conditions weigh on vulnerable sectors, raising the likelihood of credit stress.
A Middle East crisis that hits growth while fuelling inflation will put the central bank in an awkward spot. Governor Rhee Chang Yong is set to preside over his final rate decision on April 10 before his nominated successor Hyun Song Shin is scheduled to take over, with markets watching whether inflation risks could eventually prompt a more hawkish shift in policy.
By destination, shipments to China climbed 64.2%, exports to the US increased 47.1%, and those to Central and South America gained 37.7%.
Uploaded by Liza Shireen Koshy
