South Korea: Trade resilience and energy-driven CPI – DBS

DBS Group Research sees South Korea’s March exports remaining in double-digit growth, supported by strong AI and data centre demand, higher memory prices and supply shortages, leading to a wider trade surplus despite rising import costs. CPI is projected around 2.3% year-on-year, above target, prompting government measures including fuel caps, reserve releases, energy-saving campaigns and a KRW 25 trillion supplementary budget.

Robust exports but inflation stays above target

"South Korea: March trade and CPI data will be the key focus this week, marking the first set of economic releases following the outbreak of the Iran conflict."

"Export growth is expected to remain robust in double-digit territory and accelerate from Jan–Feb levels, supported by strong global demand for AI and data center infrastructure, rising memory chip prices, and ongoing supply shortages."

"This strength is likely to offset faster import growth driven by higher oil and LNG costs, resulting in a widening trade surplus in March."

"On the inflation front, CPI is expected to remain above the 2% threshold and edge higher to around 2.3% yoy in March, reflecting the combined impact of rising global energy prices and the depreciation of the KRW."

"In response, the government has introduced a series of measures to stabilize prices and mitigate the effects of the Iran conflict."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)