Korea’s trade surplus hits a record $23B. Here’s what’s driving it

In the first 20 days of September, South Korea's trade surplus expanded to a record $23 billion, according to Goldman Sachs. The surge in exports was primarily driven by a strong performance in semiconductor shipments, which grew by 16% and accounted for roughly 60% of the sequential rise in overall exports. This increase in semiconductor exports was significant as it marked the biggest contributor to the overall growth.

In addition to the semiconductor boom, auto and auto parts exports saw a sharp rebound, increasing by 60.8% after two months of decline. This sector alone contributed to nearly a quarter of the overall sequential export increase. Shipments to the United States were particularly robust, surging by 48.1%, which was more than double the previous month's rate of 13.6%. The U.S. accounted for over half of the overall export gain.

Other technology exports experienced a decline of 1%, but the rate of this decline slowed down from the previous month. Higher shipments of handsets and household appliances were partially offset by weaker computer exports. Ship exports also rebounded strongly, with demand from the United States leading the charge. Shipments to Taiwan and the European Union also showed a significant increase of 43.6% and 34.7%, respectively, together contributing approximately 30% of the total export growth.

Exports to mainland China grew by a modest 1.2%, indicating a comparatively slower performance in that market. Nonetheless, the stronger export performance led to a notably elevated non-seasonally adjusted trade surplus of $23 billion, a substantial increase from $14 billion in the previous month.