South Korean exports rose unexpectedly in October, driven by robust semiconductor and vessel shipments, despite fewer working days due to the Chuseok holiday and the ongoing impact of US tariffs.
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Exports increased 3.6% year-on-year in October, surpassing market expectations, with average daily exports up 14.0% after adjusting for calendar effects. Year-to-date growth accelerated to 2.4%, indicating that underlying export momentum remains solid.
Out of fifteen major export categories, four showed gains. Semiconductor exports surged 25.4%, bolstered by strong demand for high-bandwidth memory and DDR5 chips. Vessel exports, including offshore plants, jumped 131.2%, marking the eighth consecutive increase. Petroleum exports also rose for the second consecutive month, while other key sectors such as cars, steel, general machinery, and home appliances saw declines, partly reflecting US tariffs.
Imports fell 1.5%, with energy imports down 9.0% due to lower global commodity prices, while non-energy imports edged up 0.4%, including notable rises in semiconductor equipment (9.5%) and computer imports (32.1%), signalling continued investment in technology.
"The US-Korea trade agreement reached on 29 October is expected to alleviate pressure on auto exports," noted Min Joo Kang, Senior Economist, South Korea and Japan. "Furthermore, easing trade tensions between the US and China would likely have a positive impact on Korean exports."
Forward-looking indicators suggest exports will continue to rise modestly in 2026, supported by filled order books from major chipmakers and robust vessel demand. Domestic consumption is also expected to remain steady, despite reduced government cash handouts, underpinned by positive consumer sentiment and strong equities.
Reflecting these factors, ING has revised South Korea's GDP forecast for 2026 upwards from 1.8% to 2.0%, maintaining a 0.6% quarter-on-quarter growth outlook for Q4 2025.
"With growth conditions improving and inflation remaining around 2%, the Bank of Korea's focus should remain on financial market stability," Kang added. The central bank may consider a 25-basis-point rate cut in the first half of 2026, with 2.25% seen as the terminal rate for this easing cycle.
The latest trade and economic data underline South Korea's resilience, suggesting a cautiously optimistic outlook for both exports and domestic growth as 2026 approaches.
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