South Korea's September exports set a record, surging 105% year-on-year as the chip boom continues

Zhitong Finance APP has learned that South Korea's exports in September continued rapid growth, with global artificial intelligence demand driving semiconductor shipments and strengthening market expectations that the trade-dependent economy can withstand higher interest rates. According to data released Thursday by the Korea Customs Service, after adjusting for working day differences, exports increased by 104.9% year-over-year. Export value reached $120.9 billion, a historic high, following a surge in shipments in the first 20 days of the month to a record for the same period.

The Customs Service stated that in the first nine months of 2026, South Korea's exports also hit a record $814.5 billion, surpassing $800 billion for the first time. Unadjusted exports grew by 83.5%, compared to a revised 68.7% growth in August. Imports rose by 26%, resulting in a trade surplus of nearly $50 billion.

Semiconductors remain the driving engine of the boom, with chip exports soaring 263% year-over-year to a record $60.3 billion. Computer shipments surged 435%, and petroleum products increased by 72%. Automobile exports fell by 5%.

Despite fewer working days in September this year due to South Korea's Chuseok holiday (September 24–26), exports still achieved strong growth. Last year's Chuseok holiday fell in October, which could distort year-on-year calendar effects.

State Street Bank Asia-Pacific macro strategist Jiuk Choi said: “There is no doubt that September exports and trade balance were both far above market consensus and our prior estimates.” He expects export growth to slow from the fourth quarter due to base effects. He added that expansion of global AI-related investment and rising high-bandwidth memory chip prices will continue to support exports.

Data show that South Korea's trade momentum remained strong by the end of the third quarter, supporting the Bank of Korea’s view that the economy can withstand higher borrowing costs and reinforcing the case for further monetary tightening.

In August, the Bank of Korea raised its benchmark interest rate by 25 basis points to 3%, marking the second consecutive rate hike, after stronger-than-expected growth and persistent underlying inflation prompted policymakers to act earlier.

The Bank of Korea also raised its 2026 growth forecast from 2.6% to 3.3%, citing robust exports and investment driven by global AI development. Its six-month interest rate forecast median is 3.25%, suggesting a further rate hike of 25 basis points, but Governor Rhee Chang-yong indicated this points to a gradual tightening following consecutive increases.

Choi expects third-quarter growth to roughly match the Bank of Korea’s forecast of 0.3% quarter-on-quarter and believes that as the AI boom accelerates, the central bank will make a slight upward revision to growth and core inflation forecasts in November.

JPMorgan believes that if chip-driven growth generates stronger inflation without significant financial market stress, interest rates may need to rise further. The Wall Street bank expects the Bank of Korea to raise rates in November, next February, and May, lifting the benchmark rate to 3.75%.

The chip boom is also changing the government’s fiscal position. South Korea expects this year’s national tax revenue to reach a record 478.6 trillion won ($353 billion), up 28% from 2025, as semiconductor profits, special dividends by chipmakers, a booming stock market, and consumption recovery boost tax income.

Inflation is another key consideration for the Bank of Korea. In August, the overall consumer price increase accelerated to 3.1%, while core inflation excluding volatile food and energy prices rose to 3.4%, indicating that underlying price pressures remain firm.

Sustained strong exports are also improving South Korea's external position and may support further appreciation of the won, helping to contain imported inflation and giving policymakers some flexibility on the timing of the next rate increase.

By destination, exports to China grew 123%, while exports to the US surged 137%. Exports to India and the EU grew by 50% and 21%, respectively.