South Korea's Early July Exports Surge 62.9% Year-on-Year, Fueled by AI Chip Demand

Driven by sustained demand for artificial intelligence semiconductors, South Korea's exports for the first 20 days of July maintained robust growth momentum.

Data released by the Korea Customs Service on Tuesday showed that seasonally adjusted exports for July 1-20 soared by 62.9% compared to the same period last year, setting a record high for the first 20 days of any July on record.

This growth rate accelerated from the 49.7% increase seen in the same period last month.

Unadjusted for working days, exports rose by 52.3%, while imports increased by 20%, resulting in a trade surplus of $12.2 billion.

The figures indicate that external demand remains resilient, with continued investment in AI and data center infrastructure providing strong support.

Semiconductors continue to lead South Korea's export growth and overall economic expansion, partly offsetting the drag from conflicts in the Middle East.

Specifically, chip exports surged by 180.6% year-on-year, exports of computer-related products jumped by nearly 232%, and fuel exports grew by 33.4%, while automobile exports declined by 10.6%.

This data supports the Bank of Korea's decision last week to raise its policy rate for the first time in over three years.

Policymakers unanimously increased the benchmark rate by 25 basis points to 2.75% and signaled a continued tightening bias, as inflation remains above target and economic growth is expected to exceed the central bank's latest forecast.

The South Korean government recently revised its 2026 economic growth forecast upward from 2% to 3%, which is higher than the projections from the Bank of Korea and the International Monetary Fund.

Bank of Korea Governor Shin Hyun-song stated that the central bank will significantly raise its economic growth forecast for this year, adding that the next several policy meetings will be "live," meaning a rate hike is possible at each one.

He also noted that the chip boom is increasingly spilling over into consumption, investment, and wages, raising the risk that inflationary pressures could persist beyond the technology sector.

By destination, exports to China grew by 94.1%, while exports to the United States increased by nearly 40%.

Exports to Vietnam and the European Union also remained strong, reflecting sustained demand for chips and other AI-related products.