Semiconductor exports surged nearly 260% in the first weeks of September, forcing the Bank of Korea to raise its growth forecast and continue tightening even as it worries about the inflation that comes with an economy running this strong.
South Korea's exports, adjusted for differences in working days, rose 89.8% from a year earlier in the first 20 days of September, a sharp acceleration from an already strong 61.5% increase reported over the same period in August. On an unadjusted basis, shipments were up 78.3% while imports rose 26.7%, producing a trade surplus of almost $23 billion. Semiconductors remained the clear driver of the surge, with chip exports up 259.4% from a year earlier, as global demand for the memory and logic chips that power artificial-intelligence systems continues to outrun expectations.
The strength is broad enough that the Bank of Korea has had to keep adjusting its own outlook to catch up with it. The central bank raised its benchmark interest rate a quarter point to 3% in August, its second consecutive increase, and separately upgraded its 2026 growth forecast to 3.3% from 2.6%, explicitly citing the exports and investment tied to the global AI buildout. The bank's own six-month rate projections point to a median expectation of 3.25%, implying one more quarter-point increase is likely, though Governor Shin Hyun Song described the pace as gradual following the two consecutive moves already made.
Inflation is the reason the central bank cannot simply celebrate the export strength without qualification. Headline consumer prices rose 3.1% year over year in August, while core inflation, which strips out volatile food and energy costs, accelerated to 3.4%, both comfortably above the level that would let policymakers relax. Minutes from the Bank of Korea's August meeting showed most board members supporting a continued bias toward tightening specifically to prevent inflation and financial imbalances from building further, though some members argued the timing of any additional move should depend on incoming data rather than be decided in advance.
One factor working in the central bank's favor is the currency. The won's appreciation in recent months has helped limit imported inflation, giving policymakers somewhat more flexibility on when to act next, and continued export strength could support further gains in the currency, reinforcing that flexibility over time. By destination, the export strength was broad rather than concentrated in a single market: shipments to China rose 113.8%, to the United States 118%, to Vietnam 44.8%, and to the European Union 37%. For an economy whose growth has historically tracked global trade cycles closely, the scale and breadth of this month's export numbers point to a chip-driven expansion still gathering pace even as the central bank works to keep the inflation that comes with it from becoming entrenched.