South Korean Exports Decline in 2023 Amid Weak Chip Demand and Global Economic Challenges

SEOUL - South Korea's exports experienced a significant downturn in 2023, primarily due to a decrease in chip performance and widespread global economic uncertainties. This decline was highlighted in the latest data released by the Ministry of Trade, Industry and Energy.

According to Yonhap News Agency, South Korea's outbound shipments fell by 7.4 percent on-year, totaling US$632.6 billion. The country also saw a decrease in imports by 12.1 percent to $642.7 billion, leading to a trade deficit of $9.97 billion. The ministry identified the global monetary tightening moves and the delayed recovery of the Chinese economy as key factors contributing to the sluggish export performance.

Despite the overall decline, the automobile sector showed resilience, with exports remaining strong throughout the year. Additionally, semiconductor shipments showed signs of gradual recovery. In December, monthly exports increased by 5.1 percent on-year to $57.6 billion, marking the third consecutive month of growth. This rebound followed 13 months of continuous on-year decline, signifying a potential upturn for South Korea's export-driven economy.

Imports also declined in December by 10.8 percent on-year to $53.1 billion, resulting in a trade surplus of $4.48 billion. This marked the second month in a row where exports exceeded imports.

The chip sector, particularly in December, saw an impressive 21.8 percent on-year increase in exports to $11 billion, continuing a two-month growth trend. The Ministry of Trade, Industry and Energy anticipates this recovery in semiconductor exports to persist, driven by new mobile product releases and increased corporate investment in artificial intelligence.

However, for the entirety of 2023, semiconductor exports fell by 23.7 percent to $98.6 billion. Industry Minister Bang Moon-kyu expressed optimism, noting the significant milestone of chip exports exceeding $10 billion in December for the first time in 15 months, indicating a potential upcycle in outbound shipments.

Automobile exports also showed a strong performance, growing 17.9 percent to $6.3 billion, led by premium models including electric cars and SUVs. This sector has maintained growth for 18 consecutive months, reaching a record high for December. Display products, particularly OLEDs, and eco-friendly home appliances also saw increases in exports.

Interestingly, the United States emerged as the top destination for South Korean exports for the first time since June 2003, with a 20.8 percent increase in shipments totaling $11.2 billion. This was driven by strong performances in automobiles, machinery, chips, mobile products, home appliances, and steel. Conversely, exports to China decreased by 2.9 percent in December, totaling $10.9 billion, impacted by reduced steel demand amid a real estate sector slump.

For the full year of 2023, exports to the U.S. increased by 5.4 percent to $115.7 billion, while exports to China dropped 19.9 percent to $124.8 billion. The industry ministry emphasized the government's commitment to addressing external risks, including maritime security concerns in the Red Sea, to sustain the export momentum.

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