South Korea exports post sharpest expansion in 26 months on strong chip demand

The Samsung semiconductor manufacturing plant near Hwaseong, South Korea. Bloomberg

South Korea's exports expanded at their fastest pace in 26 months in December, on robust chip demand and improved global demand, providing additional signals that the recovery is on track despite resurgences in the coronavirus.

Exports in the final month of 2020 grew 12.6 per cent year-on-year, the sharpest growth since October 2018 when it grew 22.5 per cent, government data showed on Friday.

The rate of growth was sharply higher than forecast as analysts had expected a 5.6 per cent jump from a year earlier, and was much faster than a 4.1 per cent growth in November.

"Semiconductor exports were exceptionally strong, with 11 of 15 major export items posting growth ... sales of IT products boosted the overall growth," a trade ministry official said.

South Korea's monthly trade data, the first to be released among major exporting economies, is considered a bellwether for global trade.

Overseas sales of semiconductors surged 30 per cent from a year earlier, marking the sharpest expansion since August 2018, towing the overall exports recovery.

Other major items such as mobile devices, displays and computers also soared 39.8 per cent, 28 per cent and 14.7 per cent year-on-year, respectively.

By destination, exports to China, South Korea's biggest trading partner, gained 3.3 per cent from a year ago, and those to the US and European Union jumped 11.6 per cent and 26.4 per cent, respectively.

Imports rose 1.8 per cent, reversing a 1.9 per cent decline in November and marking the best reading since April 2019.

Meanwhile, for the whole of 2020, South Korea's exports slid 5.4 per cent as the coronavirus pandemic swept world trade, but that was much better than a 10.4 per cent fall in 2019, the worst in a decade and the third-worst in the country's modern history.