Strong exports in South Korea offset energy costs; inflation surpasses 2%, triggering a set of policy measures

⑴ DBS Group Research anticipates that South Korea’s exports in March will maintain double-digit growth, driven by strong demand for artificial intelligence and data centers, rising memory chip prices, and supply shortages. The export growth rate is expected to accelerate further compared to January and February. ⑵ Although the rise in crude oil and liquefied natural gas prices has pushed up import costs, robust exports are sufficient to offset this impact, and the trade surplus in March is likely to expand. ⑶ In terms of inflation, due to the combined effects of the increase in global energy prices and the depreciation of the Korean won, the consumer price index in March is expected to rise to around 2.3% year-on-year, remaining consistently above the 2% target level. ⑷ To address the impact of the Iran conflict, the South Korean government has introduced a series of price stabilization measures, including setting a cap on fuel prices, releasing reserves, implementing energy-saving initiatives, and preparing a supplementary budget of 25 trillion won.