(Bloomberg) -- South Korea’s early trade data showed that growth in exports moderated so far this month, cooling a rally that’s boosted optimism over the outlook for economic growth.

The value of shipments increased 8.5% from a year earlier in the first 20 days of June, according to data released Friday by the customs office. That compares with an 11.5% rise for the full month of May. Imports edged down by 0.6%, resulting in a trade surplus of $1.5 billion so far in June.

Continued strength in exports is key to South Korea’s economy, which expanded in the first quarter far faster than expected. The government expects the trade rally to help economic growth narrowly avoid a contraction this quarter versus the previous period, keeping the economy on track for a mid-2% level expansion in 2024.

The customs data showed semiconductor sales rose 50.2% from a year earlier so far this month, continuing to lead the gains in exports as prices pick up thanks to demand from smartphone makers, data-center operators and artificial intelligence developers. 

A strong US economy has helped offset slowing demand from China. Exports to the US increased 23.5% from a year earlier in June while those to China rose 5.6%, the customs office said in a statement.

South Korean firms are part of a wide range of global supply chains, especially in industries including semiconductors, automobiles and batteries.

Strong exports have had little impact on the moderating trend in domestic prices so far, allowing the Bank of Korea to keep its inflation forecast steady. That opens the room for the central bank to consider a policy easing in the second half of this year.

Headwinds remain for South Korea. Developers continue to struggle with debt that piled up during a pandemic-era construction boom. China, South Korea’s biggest trading partner, has yet to recover fully from a housing slump that continues to weigh on activity.

The exchange rate remains a source of concern as South Korea relies heavily on imports of energy and raw materials to assemble products destined for shipment overseas. The won has been one of Asia’s worst-performing currencies this year.

Export growth normally helps the won appreciate, but growing investment among South Korean retail investors in US markets is lessening the effect while rising tensions with North Korea further weigh on the won, said Ryu Jinlee, an economist at SK Securities.

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