Korea's Exports Poised for Improvement in Q3, Fueled by Semiconductors

South Korea's exports are anticipated to improve in the third quarter, buoyed by a favorable outlook for the information technology (IT) industry, especially semiconductors, and a relaxation of tensions in the Middle East. According to a survey of 2,000 member companies with exports exceeding $500,000 last year, conducted by the Korea International Trade Association's Institute for International Trade and Business, the Export Business Survey Index (EBSI) for the third quarter stood at 107.0. An EBSI score above 100 indicates that more companies expect the economy to improve in the following quarter.

Positive influences include expectations for improved supply and production conditions for raw and intermediate materials due to the stabilization of the geopolitical situation in the Middle East and robust demand for IT products like semiconductors. The EBSI for the semiconductor sector was recorded at 142.6. Other key items expected to lead third-quarter exports above the benchmark include wireless communication devices and parts (120.3), ships (115.7), and medical, precision, and optical instruments (110.8).

Conversely, export conditions worsened for electrical and electronic products (74.1) and plastic, rubber, and leather products (76.0). Companies anticipate improvements in capacity utilization (114.3), export consultations and contracts (111.9), and the supply and sourcing of raw and intermediate materials (111.4).

The primary challenges for third-quarter exports were identified as rising raw material prices (24.7%) and increased logistics costs (17.9%). Lee Gwan-jae, a senior researcher at the Korea International Trade Association, analyzed that the export recovery in the third quarter reflects not only the strength of IT items but also the normalization of supply and production conditions. He also noted the significant volatility in oil prices, exchange rates, and logistics costs.