South Korean exports rose, inflation to hit BOK target: Reuters poll by Reuters

By Jihoon Lee

SEOUL (Reuters) – South Korea’s exports are expected to have risen for an 11th straight month in August, a Reuters poll showed on Thursday, as economists noted a growing boost from Chinese demand.

Meanwhile, consumer inflation is expected to fall to the central bank’s medium-term target of 2 percent for the first time in nearly 3½ years, the survey also said.

August exports from Asia’s fourth-largest economy are forecast to have risen 13.0 percent from a year earlier, according to the average estimate of 16 economists polled Aug. 23-28.

That would be only slightly lower than a 13.9 percent annual increase in the previous month, which was the strongest since January. The figure suggests demand for South Korean goods remains robust, economists said, citing base effects.

South Korea is the first major exporting economy to report monthly trade figures each month, providing an early picture of the state of global demand.

Its exports rose from October 2023, led by semiconductors and US shipments on demand related to artificial intelligence.

“Exports of IT products, including semiconductors and computer parts, continue to grow at a fast pace, while car sales are also seen to return to growth,” said Stephen Lee, economist at Meritz Securities.

In the first 20 days of this month, exports rose 18.5%, with shipments of semiconductors and automobiles up 42.5% and 7.9%, respectively. By destination, exports to the United States rose 18.0 percent, while those to China rose 16.3 percent.

“Especially, the recovery of shipments to China will lead to an increase in exports in August,” said Park Sang-hyun, economist, iM Securities.

The survey also forecast a 6.3 percent increase in imports year-on-year, down from the previous month’s 10.5 percent gain, which was the fastest since September 2022.

The country’s trade balance is expected to post a surplus for the 15th straight month, with the average estimate at $4.67 billion, up from $3.60 billion in July.

Meanwhile, the monthly survey showed South Korea’s annual inflation likely fell to 2.0 percent in August from a 2.6 percent rise in July to mark the weakest since March 2021.

South Korea is scheduled to report trade figures for August at 9am (0000 GMT) on Sunday, September 1, and inflation data on September 3.