South Korea Rides Semiconductor Wave in Export Recovery Amid U.S. Trade Tensions
1min read In the wake of a resurgence in semiconductor demand, South Korea's exports have picked up momentum, offering a timely boost to policymakers striving to uphold the trade-dependent economy amidst external challenges. Particularly concerning is the prospect of increased tariffs under former U.S. President Trump's trade policies, posing potential obstacles for South Korea, one of the world's most export-reliant nations.
Recently disclosed figures reveal that South Korea's exports, when adjusted for working day differences, rose by 3.6% in November compared to the previous year. This marks a recovery from the prior month's dip. Overall, exports saw a 1.4% increase, while imports fell by 2.4%, resulting in a trade surplus of $5.6 billion.
South Korean policymakers and business leaders have been on alert regarding the country's vulnerability to protectionism, especially given Trump's commitment to imposing higher tariffs on trade partners. Although South Korea might only face a 10% general tariff, raised tariffs on key partners could indirectly impact its economy. These concerns have prompted a surprise decision by the Bank of Korea to consecutively lower its key interest rates. This move aims to brace the economy against potential adversities that might arise from Trump's re-engagement in January.
The central bank has expressed concerns about the slowing growth in technology product exports. South Korea hosts two of the world's largest memory chip manufacturers, deeply integrated into the global tech supply chain. According to predictions by the Bank of Korea, the nation's economy may struggle to exceed 2% growth in 2025 and 2026, partly due to the memory chip industry's downward trajectory following a cyclical peak. Additionally, private consumption remains weak, with households and businesses feeling the squeeze of prolonged high interest rates.
