(Bloomberg) -- South Korea’s export growth accelerated last month, led by record demand from the US fed by strong economic momentum as China struggles to recover from a domestic slump.

Shipments that reflect working-day differences increased 11.3% from a year earlier, according to data released Wednesday by the customs office. Without the adjustment, headline exports rose 13.8% while overall imports increased 5.4%. The trade surplus came to $1.5 billion.

Exports to the US amounted to an all-time high of $11.4 billion in April, rising 24% from a year earlier, according to the trade ministry. Meanwhile, shipments to China totaled $10.5 billion with a year-on-year increase of 9.9%. The trend in which exports to the US exceeded those to China stretched to a third consecutive month.

The shift in South Korea’s trade activity with its two leading destinations for goods coincides with simmering geopolitical risks, as Washington ratchets up its export controls on Beijing in an effort to maintain its global dominance. The US earlier this year accused China of affecting global prices by over-producing goods that it claims are sold below the cost of production.

Seoul has had to navigate a path through the tensions. South Korea has emerged as a major beneficiary of the US infrastructure boom, supplying everything from machines to power cables. That’s in addition to resurgent sales of semiconductors used in artificial intelligence development and electric cars that are popular in the world’s biggest economy, according to Austin Chang, director of analysis and forecasts at the Korea International Trade Association.

“South Korea is enjoying a windfall from more and more Chinese products being driven out of the US,” Chang said. “The odds are becoming stronger that more exports will keep going to the US than China.

China, which was the No. 1 destination for South Korean products for two decades, is struggling to rebound from a consumption slowdown triggered by a property market slump. It reported a surprise decline in industrial profits in March, underscoring the risks.

The world’s second-biggest economy also continues to replace imports with domestic goods, making it harder for companies like Samsung Electronics Co. and Hyundai Motor Co. to sell their products there.

South Korean exporters have meanwhile benefited from strong demand in developed economies including the US. The International Monetary Fund said last month that advanced economies would likely see a pickup in their growth this year compared with 2023, while emerging and developing markets experience a modest slowdown.

Semiconductor sales have been recovering even as Middle East tensions persist and global interest rates stay elevated, pressuring consumption. Top companies including SK Hynix Inc. and Samsung Electronics Co., have reported better-than-expected earnings as demand for the memory chips that power modern electronics and artificial intelligence rebounds from last year’s downturn.

Exports of semiconductors jumped 56.1% from a year earlier in April. Automobile exports rose 10.3%, according to the trade ministry. Shipments of oil products increased 19%.

What Bloomberg Economics Says...

“This marked a seventh straight month of export gains, primarily fueled by surging shipments of memory chips. The data reinforce our view that external demand will drive an economic expansion in 2024.”

—Hyosung Kwon, economist

Click here to read the full report

“Export growth will likely remain the main driver of growth this quarter amid the strong demand for semiconductors,” Dave Chia, an associate economist at Moody’s Analytics, said in a note before the trade figures. “Export growth will likely remain the main driver of growth this quarter.”

The South Korean economy expanded 1.3% in the first quarter, a pace faster than the most optimistic estimates, with exports driving the momentum. Separately, Taiwan, another major semiconductor-producing nation, reported the fastest economic expansion in almost three years in the first quarter as global demand for AI-related technologies fueled a boom in exports.

“Recent data suggest the strength in Asian exports may still have some way to go,” Sheana Yue, an Oxford Economics economist, said. “The chip upcycle should keep exports of advanced semiconductors and associated manufacturing equipment elevated. But we maintain our caution about the general outlook for external demand.”

A key source of concern for South Korean policymakers is the sliding value of the won against the dollar. While companies such as Hyundai Motor Co. have beat earnings forecasts partly on the back of a weaker local currency, smaller companies and importers are struggling to cope with higher costs of raw materials and energy. The won has been one of the worst-performing currencies in Asia this year.

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