South Korea's export momentum stayed steady in the first 20 days of September, fueled by semiconductor shipments underpinned by global artificial intelligence demand and the broader trade-reliant economy. According to customs data released on Monday, exports rose 89.8% year-on-year on a working-day-adjusted basis, accelerating from the 61.5% initial gain recorded during the same period in August. Unadjusted exports climbed 78.3%, while imports increased 26.7%, generating a trade surplus of nearly $23 billion.

Semiconductors remained the primary growth engine, with chip exports jumping 259.4% year-on-year. Petroleum product shipments rose 47.8%, and automobile exports gained 9.3%. By destination, exports to China expanded 113.8%, while shipments to the United States surged 118%. Exports to Vietnam and the European Union grew 44.8% and 37%, respectively.

These figures indicate that South Korea's trade vitality remains robust heading into the end of the third quarter, bolstering the central bank'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 second consecutive hike, as stronger-than-expected growth and persistent underlying inflation prompted policymakers to act ahead of schedule. The central bank also lifted its 2026 growth forecast from 2.6% to 3.3%, citing robust exports and investment driven by global AI infrastructure buildout.

The median projection for the policy rate over the next six months stands at 3.25%, implying one additional 25-basis-point hike. However, Governor Shin Hyun Song noted that this figure points toward a gradual tightening path following the two consecutive increases. Minutes from the August meeting revealed that most board members supported the central bank's tightening bias to prevent further deterioration in inflation and financial imbalances, though some members indicated that the timing of additional action should hinge on upcoming data and the impact of the recent rate hikes.

The strong chip cycle has boosted corporate earnings and investment in South Korea, yet policymakers remain watchful over how much these gains will translate into household consumption and spill over to other sectors of the domestic economy. Inflation remains a key consideration for the central bank. Headline consumer inflation rose 3.1% in August, while core inflation, which strips out volatile food and energy prices, accelerated to 3.4%, signaling that underlying price pressures stay firm.

The appreciation of the Korean won in recent months has helped curb imported inflation, affording policymakers some flexibility regarding the timing of the next rate move. Solid export growth and the resulting improvement in South Korea's external position could further support currency strength.