South Korean exports rose a greater-than-expected 13.4% year-on-year in December (vs 8.4% in November, 8.5% market consensus). Of the 15 main export products, six increased. IT exports were particularly strong. Semiconductors rose the most — by 43.2% — thanks to robust demand for AI data centres and strong pricing. Other IT products, such as mobile devices (24.7%), computers (36.7%), and displays (0.8%), all increased. Yet autos, petrochemicals, steel, home appliances, and batteries declined. Automotive exports declined by 1.5% due to increased overseas production and temporary product cuts during line maintenance. Steel and petrochemicals continued to decline due to global oversupply and soft prices. Though not major export categories, newly emerging sectors — primarily K-culture-related products such as food, bio-health, and cosmetics — posted steady increases.
We expect IT- and K-culture-related products to remain the key drivers of exports in 2026. Despite recent concerns about AI overvaluation, global tech capex is expected to increase. Export items facing global oversupply are expected to undergo industry consolidation and are unlikely to rebound anytime soon.
Meanwhile, imports rose 4.6% YoY in December. Energy imports declined by 6.8% while non-energy imports rose firmly by 7.3%. We believe that increased capital goods imports will boost equipment investment in the current quarter. The trade surplus widened to $12.2 billion in December, likely boosting fourth-quarter 2025 GDP growth.