South Korea exports extend robust growth on AI-fuelled chip boom

South Korea's export growth in October, particularly a 76.1 percent year-on-year increase when adjusted for working-day differences, provides a clearer picture of underlying trade momentum. This adjustment is important because the timing of national holidays, such as Chuseok, shifted between September this year and October last year, which could otherwise distort direct comparisons. The use of these adjusted figures helps to identify sustained strength in export activity, rather than a statistical artifact of holiday shifts.

The robust export figures, especially a 259 percent surge in chip exports to US$56.4 billion and a 497 percent rise in computer shipments, highlight the continued demand for AI-related components. This trend stands out against a global tech stock sell-off, which saw major US companies like Amazon.com and Intel report disappointing earnings. However, South Korean chipmakers SK Hynix and Samsung Electronics reported solid earnings and significant capital spending plans, indicating strong internal sector performance despite broader market jitters.

While the export boom positions South Korea to potentially exceed US$1 trillion in annual shipments for the first time, the benefits are not evenly distributed across the economy. Strong growth and above-target inflation coexist with weak household demand, as evidenced by a 4.1 percent jump in facility investment but a 0.2 percent fall in private consumption during Q3. This divergence complicates decisions for the Bank of Korea, which is considering interest rate adjustments amidst these mixed economic signals.