Key insights
- South Korea's March exports are expected to surge, driven by strong semiconductor demand, particularly for AI applications. This indicates continued strength in the global tech sector. Rising oil prices due to Middle East tensions are expected to increase imports and inflation, potentially offsetting some of the positive impact. Strong exports to the US and China suggest continued economic activity in those regions. Overall, the report suggests a moderately positive outlook for US equities, particularly in the tech sector, but with inflationary pressures to monitor.
By Jihoon Lee
SEOUL, March 30 (Reuters) - South Korea’s March exports probably rose at the strongest pace in nearly five years on a boom in chip demand fuelled by artificial intelligence investment, although the Iran war was set to drive up imports and inflation, a Reuters poll showed on Monday.
Exports from Asia’s fourth-largest economy, a bellwether for global trade, were projected to have risen 44.9% from a year earlier, according to a median forecast of 11 economists.
That would be faster than the 28.7% rise in February and the strongest since May 2021. It would also mark the 10th consecutive month of year-on-year gains.
"Semiconductor prices are continuing to rise sharply on robust demand for memory chips," said Chun Kyu-yeon, an economist at Hana Securities, expecting this year’s trade surpluses at record levels.
In the first 20 days of this month, exports rose 50.4%, as semiconductor sales surged 163.9%. Shipments to the U.S. and China rose 57.8% and 69.0%, respectively, while those to the European Union were up 6.6%.
"However, due to the impact of high oil prices, import growth will also be higher than previously projected," said Park Sang-hyun, an economist at iM Securities. "It is expected that there will be some disruption to shipments to the Middle East."
In Monday’s monthly survey, imports were forecast to have risen 18.0% in March from a year earlier, after growing 7.5% in February. That would mark the biggest jump since September 2022.
The median forecast for the country’s monthly trade balance stood at $21.2 billion, wider than $15.4 billion in the previous month and a record high.
Consumer inflation probably accelerated in March to 2.4%, the fastest pace in four months. Inflation was 2.0% in February.
South Korea is scheduled to report trade figures for March on Wednesday, April 1, at 9 a.m. (0000 GMT).