Korea’s export growth at 7-month low amid growing external risks

South Korea’s export growth slowed to a seven-month low in October despite strong shipments of semiconductors and automobiles, adding to concerns that Asia’s fourth-largest economy is losing momentum amid the growing uncertainties over the US presidential election and geopolitical tensions.

Exports rose 4.6% to $57.5 billion in October from a year earlier, extending their rising streak to 13 months, data from the Ministry of Trade, Industry and Energy on Friday. The growth was the slowest since March, however.

Overseas sales adjusted for working-day differences dipped 0.2% last month on-year, marking the first decline since October 2023, separate data from the customs office.

“From now on, favorable base effects, partly related to global oil prices and semiconductor prices, start to fade away, so headline export growth is expected to decelerate,” said ING in a note.

South Korea’s economy rebounded slower than central bank expectations in the third quarter as exports have already been slowing down since August.

GROWING UNCERTAINTIES

The government warned of increasing risks from the upcoming US presidential election on Nov. 5 and geopolitical tensions in the Middle East and Ukraine, pledging to do its utmost to maintain the momentum of export momentum.

“It is difficult to predict when risk factors such as the tensions in the Middle East and the war between Russia and Ukraine will end, while uncertainties over the external trade environments remain due to the US election and others,” said Minister of Trade, Industry and Energy Ahn Dukgeun in a statement.

“Uncertainties surrounding our trade environment have slightly increased as the outcome of the US presidential election is expected to change US economic and trade policies,” Ahn said.

The South Korean government will make active efforts to secure maximum interests for the country and industries, he added.

STRONG SEMICONDUCTOR, CAR EXPORTS

South Korea’s overseas sales of semiconductors, its top export item, jumped 40.3% to $12.5 billion in October from a year earlier. The country is home to the world’s two largest memory chipmakers – Samsung Electronics Co. and SK Hynix Inc.

Semiconductor exports may slow down in the fourth quarter as separate data showed its production fell 2.6% in September from the previous month, the first decline in 15 months, industry sources said.

Automobile exports grew 5.5% to $6.2 billion in October, while overseas shipments of steel products increased 8.8% to $2.9 billion, snapping an eight-month-long slide.

Exports to China, South Korea’s largest overseas market, rose 10.9% to a 25-month high of $12.2 billion thanks to strong shipments of semiconductors and petrochemical products. Sales to the US gained 3.4% to $10.4 billion.

South Korea’s imports edged up 1.7% to $54.4 billion, resulting in a trade surplus of $3.2 billion.

Write to Yeong-Hyo Jeong at hugh@hankyung.com
 
Jongwoo Cheon edited this article.