Defying some pessimistic outlooks early this year, South Korea’s exports appear to be on a recovery path in recent months, helped by solid demand for semiconductors and automobiles. But the country’s economy is not out of the woods yet, as new roadblocks such as the volatile exchange rate and from US-China trade relations continue to pop up.

On the export front, government officials have enough reasons to be upbeat. Korea’s exports posted on-year growth for the seventh consecutive month in April, with outbound shipments rising 13.8 percent to $56.2 billion, and imports rising 5.4 percent on-year to $54.7 billion, data showed Wednesday.

April’s trade surplus amounted to $1.53 billion, marking the 11th-straight month of positive trade figures amid clear signs of a recovery in demand for chips, the key export item of Korea, as well as for cars.

Quarterly figures were also positive. Exports in the first quarter of this year were tallied at $163.8 billion, up 8.3 percent from a year earlier, according to the data from the Ministry of Trade, Industry and Energy. The upsurge was attributed to the overall on-year increase in shipments to major markets such as the US and China.

Analysts point out the narrowing gap in exports between Korea and Japan in the first quarter as a particularly encouraging sign. Korea’s exports, estimated at $163.8 billion in the first three months of this year, are equivalent to 97.3 percent of Japan’s first-quarter exports, valued at $168.3 billion. It is the first time that the gap in dollar terms has fallen to under 3 percentage points.

Given that Korea and Japan fiercely compete on many of their major export destinations, the latest numbers offer a glimmer of hope that Korea may be able to outpace its rival if the strong export trend continues.

Korea’s export portfolio is said to be relatively balanced compared with that of Japan. Chips account for 15.6 percent of Korea’s total exports, followed by automobiles (11.2 percent) and machinery (8.5 percent). But Japan relies heavily on car exports, the proportion of which is 17.1 percent, while semiconductors and electronic parts make up 5.4 percent.

Korea’s dependence on semiconductors, of course, could backfire if the chip industry slows down. But if the global chip sector stays bullish and other trade factors remain favorable, the government’s export target of $700 billion this year may turn out to be feasible.

The problem is that Korea’s export drive is likely to hit rough patches in the coming months. One of the major concerns is the volatile exchange rates spurred by the strengthening of the US dollar, which puts depreciation pressure on the Japanese currency. In Monday morning trade in Asia, the Japanese yen briefly surpassed 160 against the dollar, the weakest level since April 1990.

What matters is that the depreciation of the Japanese yen has been steeper than that of the Korean won. This year alone, the yen weakened by nearly 12 percent against the dollar, a far bigger drop in value compared with the won’s depreciation of over 7 percent. The sharper weakening of the yen can make Japanese goods more affordable than Korean products in the US and other markets.

Another factor that could derail Korea’s export momentum is the deepening trade rivalry between the US and China. US President Joe Biden last month threatened to triple the rates of tariffs on steel and aluminum from China, citing unfair trade practices. On Friday, China passed the Tariff Law, aimed at hitting back against its trade partners should tariff clashes break out. It is feared that an escalating fight between Korea’s two major trading partners could spark collateral damage to Korean exporters.

Considering high-stakes risks such as the higher volatility in the currency market and the protectionist moves by the US and China, Korean policymakers must help exporters soften potential impact and seek a breakthrough by diversifying export markets and devising new trade strategies.