South Korea’s policymakers on Wednesday received two positive signals that share largely the same conclusion: A recovery in exports continues to ease the economic slowdown.

The first piece of good news came from the Bank of Korea, whose preliminary data shows the country recorded a current account surplus for the eighth month in a row in December, helped by an increase in trade surplus and dividends from overseas.

The second piece of upbeat news was reported by the state-run Korea Development Institute. In its economic trend report, the KDI pinpointed the recovery of exports, driven by semiconductors, as a factor that is softening the economic slowdown.

For government officials, especially those mapping out export policies, a continued recovery in exports that makes related economic figures more reassuring is certainly a welcome development.

But their renewed optimism may be put to the test in the coming months, due to slowing private consumption and weak facility investment that could dent the country’s overall economic growth. The widening divergence between recovering exports and sluggish domestic consumption also means that things could look far less optimistic if Korea’s exports confront abrupt obstacles.

After all, there remain a host of potentially negative factors such as growing geopolitical risks that could disrupt supply chains and jack up oil prices, as well as interest rates that continue to stay high.

Encouragingly, the country’s current account surplus stood at $7.41 billion in December, up from a surplus of $3.89 billion in November. During the same period, the goods account surplus increased from $6.88 billion to $8.04 billion.

In total, Korea posted a current account surplus of $35.49 billion, marking a 37.4 percent increase from $25.8 billion recorded in 2022 and exceeding the central bank’s earlier projection of $30 billion by a wide margin.

The higher-than-expected surplus resulted from a rebound in exports, which jumped 5.8 percent on-year in December, an increase for the three straight month. Exports began to recover in October, after a 14-month-long slump.

By export item, semiconductors and vehicles led the upsurge in the December current account surplus by posting 19.1 percent and 19.2 percent year-on-year increases, respectively. By region, exports to the US rose 20.7 percent, while shipments to Southeast Asia went up 15.4 percent.

The BOK forecast the current account surplus in 2024 would expand to $49 billion, aided by a recovery in exports.

The KDI noted similarly positive trends in exports in its monthly report, saying that outbound shipments jumped 18 percent on-year in January, compared with an increase of 5 percent a month earlier. The growth was powered by solid demand for semiconductors, which posted a whopping 56.2 percent surge in exports last month. Exports of cars also sprinted 24.8 percent on-year in January.

The KDI said exports softened the economic slowdown but warned about continued problems with slow private consumption and facility investment, citing persistently high interest rates as one of the key factors. In detail, retail sales, reflecting private spending, dropped 2.2 percent on-year in December. Sales of passenger cars and food items fell 9.7 percent and 5.2 percent, respectively.

In January, consumer prices rose 2.8 percent on-year, falling below the 3 percent range for the first time in six months. This prompted the Ministry of Economy and Finance to put out a positive interpretation, saying that inflation was “better than expected.” But the KDI offered a different take, saying that a declining trajectory of inflation is influenced by the contraction in domestic demand.

A senior official at the BOK said Wednesday that the current account surplus will widen further this year on the strength of semiconductors. But economic policymakers also ponder the KDI’s emphasis on the worrying divergence between export performance and domestic demand.