South Korea's exports in the first 20 days of September continued strong momentum, with chip exports surging 259% and remaining the growth driver.

South Korea's exports continued steady growth in early September, driven by semiconductor shipments supported by global artificial intelligence demand and by a broader economy that relies on trade. Data released by Korea Customs on Monday showed that, after adjustment for working days, exports in the first 20 days of September rose 89.8% year on year, compared with an initial reading of 61.5% growth in the same period of August. Unadjusted exports rose 78.3%, imports rose 26.7%, and the trade surplus was nearly $23 billion. Semiconductors remained the main DRIVE of this round of growth, with chip exports surging 259.4% year on year. Petroleum product shipments rose 47.8%, and automobile exports rose 9.3%. By destination, exports to China rose 113.8%, and exports to the United States rose 118%. Exports to Vietnam and the European Union rose 44.8% and 37%, respectively. The data show that South Korea's trade momentum remained strong through the end of the third quarter, further supporting the Bank of Korea's view that the economy is resilient enough to withstand higher borrowing costs. The Bank of Korea raised its benchmark interest rate by 25 basis points to 3% in August, its second consecutive hike; stronger-than-expected economic growth and persistently stubborn underlying inflation had prompted policymakers to act early. The Bank of Korea also raised its 2026 growth forecast from 2.6% to 3.3%, citing strong exports and investment driven by the global AI buildout. Its median six-month rate forecast was 3.25%, implying one more 25-basis-point hike, although Governor Shin Hyun Song said the figure pointed to a shift toward gradual tightening after two consecutive rate increases. Minutes of the August meeting showed that most members supported the central bank's tightening bias to prevent inflation and financial imbalances from worsening further; however, some members noted that the timing of further action should depend on subsequent data and the impact of the past two rate hikes. The strength of the chip cycle has boosted South Korea's corporate earnings and investment, although policymakers are still waiting to see how much these gains will drive household consumption and spill over into other parts of the domestic economy. Inflation is another key consideration for the Bank of Korea. Overall consumer inflation rose 3.1% in August, while core inflation, which excludes volatile food and energy prices, accelerated to 3.4%, indicating that underlying price pressures remain firm. The won's appreciation in recent months has helped curb imported inflation, giving policymakers some flexibility on the timing of the next rate hike. The steady growth in exports and the resulting improvement in South Korea's external position may support further strengthening of the exchange rate.