Strong demand amidst the flames of war! South Korea's exports in the first 20 days of April increased by 49%, with semiconductor exports surging by 182.5%.

South Korea's export growth remains strong, indicating resilient overseas demand, despite risks posed by surging oil prices and currency depreciation to inflation and economic growth. Data released by South Korea's customs on Tuesday show that exports in the first 20 days of April grew by 49.4% year-on-year after adjusting for workday differences. In comparison, the growth in the same period in March was 40.4%. Unadjusted data shows that exports increased by 49.4%, imports by 17.7%, with a trade surplus reaching $10.4 billion. South Korea's export momentum remains strong. Driven by robust investments in artificial intelligence and data centers, semiconductor exports surged by 182.5%, driving overall export growth. Computer peripherals exports surged by 399%. Exports of petroleum products grew by 48.4%, partially due to the rise in international oil prices. Meanwhile, exports of automobiles and automobile parts both declined. These data indicate that despite escalating external risks, South Korea's export engine remains stable. Uncertainty from the Iran conflict has pushed up oil prices, increased import costs, and exacerbated inflation pressures on South Korea's economy, heavily reliant on energy imports. Shin Hyun-Song, the newly appointed Governor of the Bank of Korea, emphasized the challenges faced by future policies last week, forecasting that rising oil prices and the depreciation of the Korean won would increase inflation while also hindering economic growth in South Korea. He downplayed the possibility of stagflation but warned about excessive fluctuations in the Korean won. Import prices in South Korea skyrocketed by about 16% in March, marking the largest increase in nearly 30 years, underscoring the rapid impact of external shocks on the South Korean economy. Export prices also rose by over 16% compared to the previous month. For policymakers, the pivotal question lies in whether this shock is only temporary. Earlier this month, outgoing Bank of Korea Governor Lee Ju-yeol (whose four-year term ended on Monday) stated that if the shock is temporary, the central bank would not adjust interest rates, but if inflation pressures persist, the central bank may take measures. After delivering a farewell speech on Monday, Lee Ju-yeol mentioned that Asia could be most affected by the Middle East situation, with a long-term energy shortage potentially leading to major supply disruptions for industries heavily reliant on Middle East energy. In terms of destination, South Korea's exports to China increased by 70.9%, to the United States by 51.7%, reflecting sustained strong growth in key markets. Exports to the European Union grew by 10.5%. South Korea's export data is considered a barometer of global demand levels. South Korea is among the first to release monthly trade data among major exporting economies globally, providing important clues for investors to understand the health of global demand, hence being seen as the "canary in the coal mine" of the global economy.