South Korea's exports are projected to jump 44.9% in March, marking the strongest growth in almost five years driven by artificial intelligence chip demand. However, Middle East tensions are expected to push import costs higher due to rising oil prices.
Economic forecasters predict South Korea will experience its most robust export growth in nearly half a decade during March, with shipments overseas expected to climb 44.9% compared to the same period last year, according to a new Reuters survey of economists.
The projected increase would surpass February’s already strong 28.7% growth rate and represent the most significant export expansion since May 2021. If realized, this would extend South Korea’s streak of year-over-year export gains to ten consecutive months.
The driving force behind this economic surge appears to be unprecedented demand for semiconductor technology, particularly memory chips used in artificial intelligence applications. Hana Securities economist Chun Kyu-yeon noted the trend, stating: “Semiconductor prices are continuing to rise sharply on robust demand for memory chips.” Chun anticipates this year’s trade surpluses could reach unprecedented levels.
Data from the first three weeks of March supports these optimistic projections, showing exports jumped 50.4% during that period. Semiconductor sales alone skyrocketed 163.9%, while shipments to major trading partners showed remarkable growth: the United States saw increases of 57.8%, China experienced 69.0% growth, and European Union exports rose 6.6%.
However, geopolitical tensions in the Middle East are creating economic headwinds through elevated energy costs. iM Securities economist Park Sang-hyun warned of these challenges, explaining: “However, due to the impact of high oil prices, import growth will also be higher than previously projected. It is expected that there will be some disruption to shipments to the Middle East.”
The survey indicates imports are forecast to increase 18.0% in March compared to the previous year, a significant acceleration from February’s 7.5% growth. This would represent the largest import surge since September 2022.
Economists project South Korea’s monthly trade surplus will reach $21.2 billion, expanding from the previous month’s $15.4 billion figure and potentially setting a new record high.
The economic momentum is also affecting domestic prices, with consumer inflation expected to accelerate to 2.4% in March, up from February’s 2.0% rate and marking the fastest pace in four months.
South Korea’s government plans to release official March trade statistics on Wednesday, April 1, at 9 a.m. local time.