South Korea exports maintain momentum despite tariffs impact

SOUTH Korea’s exports maintained growth momentum in December, easing concerns over global trade protectionism and tariff-related uncertainty that had weighed on the country for much of the year.

The value of shipments adjusted for working-day differences increased 8.7 per cent from a year earlier in December, according to data released Thursday (Jan 1) by the customs office. That compared with a 13.3 per cent gain initially reported for the full month of November.

Unadjusted exports rose 13.4 per cent, and overall imports increased by 4.6 per cent, resulting in a trade surplus of US$12.2 billion.

The ongoing growth in exports offers some relief for South Korea after months of negotiations with the US over a trade deal.

The agreement by the US to impose an across-the-board 15 per cent tariff on South Korean goods brought relief compared with higher duties imposed in the spring, though the level of taxation is still higher than in the period before Donald Trump began his second term as US president. 

Strong AI-related demand continues to support South Korea’s export performance, underscoring the economy’s reliance on the global chip cycle.

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The trade data also follow a decision in late November by the Bank of Korea to keep its benchmark interest rate at 2.5 per cent as policymakers balance the desire to support the economy against financial stability risks. 

Governor Rhee Chang Yong said the board members remain evenly split over the near-term outlook, highlighting a cautious stance on any additional easing. 

With exports equivalent to more than 40 per cent of gross domestic product, the year-end resilience may give the central bank more room to stay patient as it monitors risks ranging from household debt to currency volatility. BLOOMBERG