South Korea's exports in the first 20 days of September continued strong momentum, with chip exports soaring by 259%, remaining a key driver of growth.

According to Zhihui Finance APP, South Korea's exports in early September continued to maintain robust growth, driven by semiconductor shipments bolstered by global artificial intelligence demand and the broader trade-dependent economy. Data released by Korea Customs on Monday showed that, after adjusting for working days, exports in the first 20 days of September increased by 89.8% year on year, compared to an initial reported increase of 61.5% in the same period of August. Unadjusted export growth was 78.3%, imports grew by 26.7%, resulting in a trade surplus of nearly $23 billion.

Semiconductors remain the main driver of this growth cycle, with chip exports up 259.4% year on year. Petroleum product shipments increased by 47.8%, and automobile exports rose by 9.3%. By destination, exports to China surged by 113.8%, and exports to the US increased by 118%. Exports to Vietnam and the EU grew by 44.8% and 37%, respectively.

This data indicates that South Korea's trade momentum remained strong through the end of the third quarter, further supporting the Bank of Korea's view that the economy is resilient enough to withstand higher borrowing costs.

In August, the Bank of Korea raised its benchmark interest rate by 25 basis points to 3%, marking a consecutive second rate hike; this came after economic growth outperformed expectations and underlying inflation remained persistently high, prompting policymakers to act ahead of schedule.

The Bank of Korea also raised its 2026 growth forecast from 2.6% to 3.3%, citing strong exports and investments fueled by global AI development. Its six-month median rate forecast is 3.25%, implying another 25 basis point rate hike, though Governor Shin Hyun Song indicated this points towards a gradual tightening approach following two consecutive increases.

Minutes from the August meeting show that most committee members supported the central bank's tightening stance to guard against further deterioration of inflation and financial imbalances; however, some members noted that the timing of additional action should depend on subsequent data and the effects of the past two hikes.

The strong chip cycle has boosted South Korea's corporate profits and investment, but policymakers are still waiting to see to what extent these gains will drive household consumption and spill over into other sectors of the domestic economy.

Inflation remains another key consideration for the Bank of Korea. In August, overall consumer inflation rose by 3.1%, while core inflation—excluding volatile food and energy prices—accelerated to 3.4%, indicating that underlying price pressures remain firm. The recent appreciation of the Korean won has helped curb imported inflation in recent months, providing policymakers with some flexibility on the timing of the next rate hike. Robust export growth and the resulting improvement in South Korea's external position may support a further strengthening of the exchange rate.