SEOUL - Robust demand for South Korean chips helped Asia’s fourth-largest economy post export growth for a sixth consecutive month in March, albeit at a pace slightly slower than expected, pointing to continued recovery in the global economy.
Exports rose 3.1 per cent from the same period a year prior, missing a gain of 5.2 per cent tipped in a Reuters poll of economists.
That followed a 4.8 per cent increase in February, hinting at recovery in global economic momentum as South Korea’s dominance in semiconductors and other high-tech goods makes the country a barometer for global demand.
Overseas sales of chips grew for a fifth successive month, rising 35.7 per cent and logging the best performance by value in two years, Trade Ministry data showed.
Increasing demand for artificial intelligence-related memory is driving semiconductor sales, as the world’s two biggest makers of memory chips – Samsung Electronics and SK Hynix – flagged improving chip demand for the year ahead.
Exports of computers and mobile communication devices increased 24.5 per cent and 5.5 per cent respectively, while that for cars declined 5 per cent.
By destination, exports to China rose 0.4 per cent from a year earlier, and those to the United States increased 11.6 per cent.
Separate data released on April 1, however, showed weaker manufacturing activity in March as slowing domestic demand offset robust overseas sales.
The purchasing managers’ index stood at 49.8 in March on a seasonally adjusted basis, from 50.7 in February, the data showed.
Firms surveyed for the index mentioned “a muted domestic economy holding back production and sales” due to high borrowing costs.
As a nation that has China as its biggest trading partner and the US as its top security ally, South Korea is among the nations most vulnerable to geopolitical clashes that can weigh on international trade momentum. While US consumer sentiment and spending have remained strong, demand from China has been underwhelming as the world’s second-largest economy struggles to emerge from its property slump.
Adding to risks in 2024 is a series of elections scheduled across a wide swathe of the world that could result in protectionist policies that damage trade-reliant economies like South Korea’s.
The country itself will hold parliamentary elections later in April, in a vote that could influence the degree to which it recalibrates its relationship with China in the long run. REUTERS, BLOOMBERG
