The AI dividend continues to be released! South Korea's exports maintained a strong growth trend in August, with chip exports soaring by twofold.

Against the backdrop of continued demand for artificial intelligence (AI) driving chip exports and injecting strong momentum into the overall economy, South Korea's exports maintained a robust growth trend in August. This also left the South Korean central bank with little reason to retreat from its recently adopted hawkish stance after two consecutive interest rate hikes. Data released by the South Korean Customs Service on Tuesday showed that after adjusting for working day differences, export values surged 72.5% year-on-year; imports increased by 22.5%, resulting in a trade surplus of $34.7 billion for the month. Unadjusted export values grew by 68.7%, surpassing the revised 63% increase in July. Semiconductors remain the primary driver of export growth in South Korea for August. Chip exports skyrocketed 209% year-on-year, reaching $46.7 billion; exports of computer products surged 419%. The data indicates that, despite rising energy prices and geopolitical tensions putting pressure on other industries, external demand remains resilient. This further solidified the South Korean central bank's decision to raise the benchmark interest rate by 25 basis points at its second consecutive meeting last week. Additionally, the bank revised its economic growth forecast for 2026 from 2.6% to 3.3%, providing more leeway for policymakers to focus on inflation issues. South Korea's overall inflation rate slowed to 2.8% in July, below market expectations; however, the core inflation rate, excluding volatile food and energy prices, accelerated to 2.6%, indicating that underlying price pressures remain strong. Meanwhile, the economy grew by 0.6% quarter-on-quarter in the second quarter, surpassing economists' expectations. The South Korean central bank maintained its forecast for price increases, still predicting a consumer inflation rate of 2.7% for this year and 2.3% for 2027. The core inflation rate, excluding energy and food price fluctuations, is expected to be 2.5% in both this year and next, slightly adjusted upward from previous estimates. South Korean central bank governor Rhee Chang-yong stated that consecutive interest rate hikes help stabilize the foreign exchange market and further strengthen the won. He also noted that there is still room for the won to appreciate. In recent months, the exchange rate of the won has risen significantly, breaking through the 1,400 won to 1 dollar mark, and last month it was the best-performing currency among major Asian currencies. This rebound is expected to help curb imported inflation. In terms of export destinations, exports to China increased by approximately 119% in August, while exports to the United States rose by 89.3%; exports to India and the European Union grew by 47.3% and 14.6%, respectively.