South Korea’s export continues strong growth, backs central bank's hawkish stance

South Korea's exports continued their impressive run in May, supporting the central bank's increasingly hawkish posture as the country's expanding semiconductor demand continues to support growth. This rise in exports comes despite growing geopolitical and inflation worries.

According to a Bloomberg report, the Korean customs office said on Monday that exports increased 60.7% in May compared to the same month last year after accounting for working-day variations. There was a $26.9 billion trade surplus as a result of a 20.8% rise in imports.

Shipments rose 53.2% on an unadjusted basis last month, up from a revised 48% increase in April.

Once more, semiconductors led the gains due to significant international investment in data centres and artificial intelligence.

According to the most recent data, South Korea's economy, which contracted at the end of 2025 but recovered significantly at the beginning of this year, continues to be robust. Due to increases in corporate investment and semiconductor exports, the gross domestic product grew 1.7% in the first quarter compared to the preceding three months, the quickest rate since 2020.

The Bank of Korea's hawkish position, which was made public last week when two board members dissented in favour of a rate increase and the updated guidance leaned toward higher borrowing costs, is further supported by the statistics.

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A raise at that meeting, according to Governor Shin Hyun Song, might have been warranted given the growing inflationary pressures brought on by rising oil costs, a weaker won, and robust economic growth.

In response to the semiconductor-led rebound, the BOK increased its growth prediction for this year from 2% in February to 2.6%. According to Shin, the chip boom might last longer than many anticipate since growing industry earnings are progressively permeating the overall economy through increased tax receipts, investment, and consumption.