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S. Korea's Record Exports: Defying Global Challenges

Photo by Timelab / Unsplash

Seoul, South Korea - The Ministry of Trade, Industry, and Energy has released export and import trends for December 2023 and the entire year of 2023.

Why it matters:

Amid the U.S.-China confrontation, the Yoon administration has pursued a policy of increased diplomacy and alliance with the West, including the U.S. and Japan, in contrast to the pro-China diplomacy of the previous Moon administration. 

One of the most interesting developments is whether South Korea's trade balance in 2023 will show a trade deficit for the first time since 1992 when South Korea and China established diplomatic relations.

Between the Numbers

Export Performance

  • Overall export growth: Exports increased 5.1% year-over-year to $57.6 billion in December.
  • Consecutive Growth: Marked the third straight month of growth despite a 2-day shortfall in fishing days.
  • Record Sectors: Significant growth in semiconductors (+21.8%) and autos (+17.9%).
  • Regional highlights: Significant increase in exports to the U.S., surpassing $11 billion for the first time.
  • Volume and value: Export volume grew by 4.7%, the highest average daily export growth rate (+14.5%) in 18 months.

Top Export Products

  • Semiconductors: Steady growth, with exports surpassing $10 billion in December.
  • Automobiles: A positive trend for 18 months, reaching the most significant export volume ever.
  • Diversified sector growth: Increases in general machinery, home appliances, displays, ships, petrochemicals, and bio-health.
  • Quarterly performance: Semiconductor exports showed an upward trend from Q1 to Q4 in 2023.

Regional export dynamics

  • Export markets are shifting: The first time in 20 years, the U.S. surpassed China as South Korea's largest export destination in December.
  • Electric vehicle exports: Record exports to the U.S., influenced by anti-inflationary legislation.
  • ASEAN and India: Export growth to ASEAN and India continued for several months.
  • Exports to China: Despite a slight decline, they remained above $10 billion for five consecutive months.

Imports and Trade Balance

  • Decline in imports: Imports fell 10.8% in December, mainly due to a decline in energy imports.
  • Decline in Energy Imports: Significant declines in crude oil, natural gas, and coal imports.
  • Trade Surplus: Recorded a surplus of $44.8 billion, the largest in three years.
  • Quarterly Trade Balance: Moved from a deficit in the first quarter to a sizable surplus in the fourth quarter.

What They Say: 

"In 2023, despite challenges, we achieved export growth and a trade surplus by October, outpacing East Asian rivals and reducing the trade deficit. The latter half saw higher export volumes," 
"For 2024, our goal is to maintain this momentum, bolstering exports as a key economic driver."

What to Expect

The International Monetary Fund (IMF) has expected South Korea to reach the country's inflation target of 2 percent by the end of next year. 

However, it raised its forecast for the average figure for next year to 2.4 percent from 2.3 percent.