(Bloomberg) -- South Korean exports continued to grow last month, adding to the optimistic outlook for economic growth and global commerce this year.

Shipments adjusted for working-day differences increased 12.5% from a year earlier, according to data released Friday by the trade ministry. Unadjusted for the lunar new year holidays, which occurred in February this year, headline exports rose 4.8%, while overall imports decreased by 13.1%. The trade surplus expanded to $4.29 billion.

South Korea serves as a key link in global trade as its companies are positioned widely across a variety of supply chains. Its exports rebounded from a year-long slump late last year, led by solid semiconductor demand. Display sales are on the rise, although automobile shipments slightly fell. The recovery raised hopes South Korea’s economic growth would accelerate this year.

The Bank of Korea last week maintained its forecast that gross domestic product will grow 2.1% in 2024, pointing to the recovery in exports. If the trend continues into 2025, it would help the economy expand 2.3%, according to the central bank.

What Bloomberg Economics Says...

“Stripping out (the lunar new year) distortion, the pace of increase in exports continued to pick up. This reinforces our view that external demand will drive an expansion in the economy in the first quarter and suggests there’s upside risk to our growth estimate. .”

— Hyosung Kwon, economist

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Still, slowing consumption and slumping construction investment pose threats to South Korea’s economic momentum. The country is also on alert for the impact from persistent geopolitical tensions, including conflicts in the Middle East. A series of elections scheduled in a wide swathe of the world this year adds to policy uncertainties for global trade as well.

The global economy is projected to grow 3.1% this year, below the historical average, as some central banks continue their inflation fight while fiscal support recedes and debt risks weigh on activity, according to the International Monetary Fund. 

“The operating performance of Korean memory chip manufacturers should improve in the next two years, as artificial intelligence demand spurs a memory upcycle,” Fitch Ratings said earlier this month. “A challenging economic outlook and ongoing geopolitical tensions remain as major risks.”

South Korean exports of chips increased 66.7% from a year earlier in February and those of display were up 20.2%. Overseas shipments of automobiles declined 7.8%. Exports of overall wireless communication devices fell 16.5% while ship exports rose 27.7%.

Shipments to China adjusted for working-day differences increased 4.8% from a year earlier, while exports to the US rose 9%.

(Adds details from report)

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