The Revival of Semiconductors... South Korea's Export Growth Rate Ranks 2nd in G20

Last Year's Q4 Export Growth Rate 4.7%, 2nd After Brazil (6.4%)
Semiconductors and Automobiles Lead Export Improvement... Expected to Continue This Year

As the semiconductor industry improves, South Korea's export growth rate in the fourth quarter of last year was the second highest among the Group of Twenty (G20) countries. The export growth trend is expected to continue this year, centered on semiconductors.

According to the OECD's trade trends report on the 28th, South Korea's export growth rate in the fourth quarter of last year was 4.7% compared to the previous quarter, ranking second among the G20.

The OECD reported that the overall export growth rate of the G20 in the fourth quarter was 0.1%, an improvement compared to -2.4% in the second quarter and -0.6% in the third quarter. The OECD evaluated that the global trade situation improved mainly in East Asian countries such as South Korea, Japan, and China. In particular, it highlighted South Korea, stating that with the improvement in the semiconductor and automobile industries, exports in the fourth quarter of last year improved significantly compared to other countries.

South Korea's export growth rate was somewhat sluggish at 0.8% in the second quarter and 0.2% in the third quarter of last year, but it improved sharply to 4.7% in the fourth quarter. This was due to a significant improvement in related industries, such as the rise in memory semiconductor prices and an increase in semiconductor exports from the end of last year.

According to the Bank of Korea and the Korea International Trade Association, South Korea's semiconductor export volume in the fourth quarter of last year increased by 10.4% compared to the same period the previous year. This marked a turnaround from a -22.6% decline in the third quarter. By product, memory semiconductors increased by 31.3%, leading the overall export improvement. Semiconductor production volume also rose by 53.3% compared to the same period last year.

It is analyzed that major memory semiconductor companies such as Samsung Electronics and SK Hynix continued production cuts, leading to a price increase in fixed transaction prices for DRAM and NAND flash in the fourth quarter compared to the previous quarter, which significantly boosted export amounts.

South Korea's automobile exports also continued to improve. Automobile exports in the fourth quarter increased by 11.6% compared to the same period last year. Demand for high value-added vehicles such as sport utility vehicles (SUVs) and eco-friendly cars remained strong, especially in North America.

As exports increased, imports also rose. South Korea's imports in the fourth quarter increased by 2.8% compared to the previous quarter. South Korea ranked third in import growth rate among the G20, following China at 3.9% and India at 3.4%.

Increase in primary raw material exports in Brazil, Australia, Indonesia, etc.

The only country with a higher export growth rate than South Korea in the fourth quarter was Brazil, at 6.4%. Brazil's increase was analyzed to be due to higher exports of raw materials such as crude oil and iron ore. Australia and Indonesia also saw a 3.5% increase, with the global economic recovery leading to increased sales of primary raw materials, similar to Brazil, which was the cause of export improvement.

Japan's exports increased by 1.5% in the fourth quarter due to higher automobile exports, and China’s exports rose by 0.6% thanks to strong smartphone sales, according to the OECD.

South Korea is expected to continue its export improvement trend this year, centered on semiconductors. The Bank of Korea anticipates that semiconductor exports in the first quarter will maintain an upward trend compared to the same period last year, supported by the growth of the artificial intelligence (AI) market, increased AI server memory capacity, and the resolution of excess inventory due to companies' supply-demand adjustment efforts. It also expects export amounts to increase in the first half of the year as memory prices continue to recover.

In its revised economic outlook, the Bank of Korea forecasts South Korea's goods export growth rate this year at 4.5%, an improvement over the 2.9% recorded last year. The Bank of Korea assessed, "Our exports are expected to maintain a favorable trend, supported by the expansion of global AI service demand and stronger-than-expected growth in the United States."