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South Korea Exports Accelerate in November with Rise in Chip Sales

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South Korea Exports Accelerate in November with Rise in Chip Sales

South Korea’s exports beat expectations and accelerated in November, with overseas chip sales rising for the first time in 16 months. Shipments from Asia’s fourth-largest economy grew 7.8% year-on-year to $55.8 billion, marking the fastest growth since July 2022. The mobilization of chips also increased by 12.9%, indicating a potential bottoming out of the decline in demand for semiconductors.

Economist Lee Da Eun from Daishin Securities commented, “Exports are surely recovering thanks to a recovery in chip demand. Car sales are also strong, so we expect overall exports to register 8% growth next year.” However, there are concerns about the momentum behind chip sales and downside risks due to the tepid recovery of the Chinese economy.

South Korean authorities are hopeful for a revival in chip demand to boost the country’s growth, as restrictive interest rates in South Korea constrain domestic demand. The country’s trade surplus in November was $3.8 billion, the largest monthly surplus since September 2021. Exports of 12 of the country’s top 15 export items increased in November, including a 38.5% increase in ship exports and a 21.5% rise in auto exports, extending gains for the 17th consecutive month.

Exports to the United States increased 24.7% for the fourth consecutive month, while shipments to China, the largest trading partner, decreased 0.2%. Imports fell 11.6% to $52 billion, resulting in an overall positive trade balance for the country. The Bank of Korea left its monetary policy unchanged on Thursday, signaling that it may need to keep interest rates higher for longer to avoid persistent inflation risks.

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