South Korea Exports Surge 72.5% as Bank of Korea Hikes Rates

South Korea recorded a trade surplus of $34.7 billion in August, fueled by a 72.5% year-over-year increase in exports. The growth was primarily driven by strong global demand for semiconductors linked to artificial intelligence, while imports rose by 22.5% over the same period.

The Bank of Korea responded to this resilient external demand by implementing a hawkish monetary policy, consisting of two consecutive interest-rate hikes of a quarter percentage point. Based on these economic indicators, the central bank upgraded its 2026 growth forecast to 3.3% from 2.6%.

While headline inflation slowed to 2.8% in July, core inflation rose to 2.6%, signaling persistent price pressures. Governor Shin Hyun Song stated that the rate hikes are intended to stabilize the currency market and facilitate further strengthening of the won, which has already outperformed other Asian currencies.