South Korea has recorded economic recovery thanks to strong export growth in recent months, amid tense trade negotiations with the U.S.
South Korea's exports have shown positive improvement despite ongoing concerns about U.S. tariff policies and their impact on the nation's economic future.
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South Korea's exports increased by 4.1% in the first 20 days of the month, mainly due to semiconductors and automobiles.
Tariff tensions from the U.S. with a 25% tax raise economic concerns and delay trade negotiations.
The South Korean government has launched an additional budget package of 31.8 trillion won to stimulate economic growth.
How did South Korea's exports perform in the past month?
According to the latest report from the Korean Customs Service, the value of exports adjusted for working days in the first 20 days of the month increased by 4.1% compared to the same period last year, indicating positive recovery of the national economy. Key sectors such as semiconductors increased by 16.5% and automobiles by 3.9%, significantly contributing to this result.
In addition, imports fell by 4.3%, resulting in a trade surplus of 465 million USD, but this surplus is lower than in June when exports rose by 6.8%.
What is the impact of U.S. tariff policies on the South Korean economy?
The U.S. imposing a 25% import tax on key items such as steel, automobiles, and soon semiconductors has put significant pressure on South Korean exports, making trade negotiations with Washington urgent. Experts say this increases risks for an economy that is still in an unstable recovery.
The new U.S. tariff policies pose serious challenges to trading partner countries, including South Korea, forcing them to accelerate negotiations to avoid economic losses.
Lee Jae Myung, President of South Korea, 2024
The South Korean economy is under pressure from tax levels, especially as the deadline for tax implementation on August 1 approaches. The delayed imposition of tariffs on several items has not eased market tensions.
How has the South Korean government responded to economic pressures?
To protect the economy from external challenges, the government under President Lee Jae Myung approved an additional budget package of 31.8 trillion won (approximately 23.3 billion USD) to promote growth and stabilize the market. The Central Bank has also lowered interest rates to 2.5% and adjusted the growth forecast to 0.8% for 2024.
The role of the semiconductor and automotive export sectors
Semiconductors continue to be the main driver of export growth with an increase of 16.5% in the month, according to Hana Securities. This sector contributed up to 8.3% of South Korea's GDP growth in recent months. Automotive exports also showed a positive growth of 3.9%, although the steel sector is still suffering due to high taxes.
What is the economic recovery process of South Korea like in June?
According to a survey of 10 economists in mid-June, June exports are expected to increase by 4.7% compared to the previous year, marking a recovery from the decline in May. This is mainly due to improved global technology demand, with semiconductors growing by up to 21.8%.
The unexpected growth in semiconductor exports is a key driver helping South Korea's economy recover, despite concerns over global trade wars.
Chun Kyu-yeon, Economist, Hana Securities, June 2024
Frequently asked questions about the South Korean economy and the impact of U.S. tariffs
Why has South Korea's exports recovered in recent months?
The strong global demand for semiconductors and automobiles has supported a 4.1% increase in exports during the first 20 days of the month, showing signs of positive economic recovery.
How do U.S. tariff policies affect South Korean exports?
The 25% tax on steel, cars, and semiconductors increases production and export costs, hindering growth and forcing South Korea to negotiate urgently with the U.S.
What measures has South Korea taken to mitigate the impact of the trade war?
The government has added 31.8 trillion won to the budget to support growth, while the Central Bank has lowered interest rates to stimulate the economy.
Which sector has driven the strongest growth in the South Korean economy?
Semiconductors play a key role with a 16.5% increase in exports, followed by the automotive sector with 3.9% growth.
What is the economic forecast for South Korea in 2024?
The Central Bank has lowered its growth forecast to 0.8% due to various risks from tariffs and global market fluctuations.
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