Merchandise trade surplus widens in February

Latest reading: In February, the trade balance was USD +15.5 billion, following a USD +8.7 billion figure in the prior month. Over the last 12 months, the trade balance summed to USD +99.7 billion. Merchandise exports were up 29.0% in year-on-year terms in February, easing from 33.8% growth in the prior month, due to three fewer working days compared to February 2025 as a result of the timing of the Lunar New Year break. Still, shipments grew for a ninth straight month. Semiconductor exports surged 160.9% to a record USD 25.16 billion, exceeding USD 20 billion for a third consecutive month amid robust AI investment and higher memory chip prices. Merchandise imports were up 7.5% in annual terms in February, coming on the back of 11.6% growth in the prior month.

Outlook: South Korea aims to lift goods exports to a record USD 740 billion this year, which would top last year’s record high of USD 709.7 billion, as the government pushes to broaden the country’s export base and reduce reliance on semiconductors. The plan backs eight key sectors—including consumer goods, biohealth, steel, defense and nuclear power—which will benefit from extra funding, financing support and stronger diplomatic ties with countries in the Middle East and Latin America. Our panelists expect the government to reach its export target in 2026, supported by still-elevated prices in the AI sector, where South Korea is a key player. Strong merchandise exports should also boost government revenue and strengthen the currency, helping to cushion the blow from higher energy costs stemming from the U.S.-Iran conflict.

Panelist insight: Commenting on the Outlook, Nomura’s Jeong Woo Park stated:“Although the conflict across the Middle East is renewing upward pressure on oil prices and increasing the downside risks to the growth outlook, we expect the strong chip cycle to mitigate the growth downside risks, as structural AI demand and worsening chip supply constraints are driving chip cycles. Thus, as chip prices are likely to rise more than oil prices, we maintain our optimistic view on exports and reiterate our above-consensus 2026 GDP growth forecast.”

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