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The Ministry of Trade, Industry and Energy (MOTIE) held a meeting to review Korea’s trade conditions in the second half of this year with 12 industry associations and export companies last week.
Participants noted that despite difficult external conditions, including a rapid decrease in Korea’s exports to Japan, slowed exports to other countries due to competition with Japanese companies and the continued financial crisis in the European Union (EU), Korea showed strong performance with its record high trade surplus of USD 20.02 billion.
Korea’s exports are expected to grow in the second half of this year backed by increased global demand with the United States’ economic recovery. However, Korea is also expected to face difficulties, including a slowed Chinese economy and a low yen.
Exports of ships, wireless communication devices, semiconductors and automobiles are expected to rise by more than 7 percent.
In terms of ships, total exports are forecast to rise supported by more exports of high-added value special ships, including floating production storage and offloading ships, drill ships and liquefied natural gas carriers, whereas bulk carrier and merchant ship exports are expected to decrease slightly, as exports to the EU slowed due to the EU financial crisis.
Exports of wireless communication devices are expected to grow with the release of strategic smartphones in September and the greater market dominance of Korean companies.
Semiconductor exports will rise with higher demand for smart devices and raised memory conductor prices due to a supply shortage.
Automobile exports are also expected to rise with global economic recovery and the stabilization of supply chains.
The textile, automotive parts, general machinery and home appliance industries are forecast to show export growth, from 0 to 7 percent.
Despite the EU financial crisis, slowed Chinese economy and other external risks, stable global prices of raw materials and increased demand in the Southeast Asian market will contribute to increased exports of the textile industry.
External export circumstances are disadvantageous for the auto parts industry, but Korea’s exports to the United States and China, the largest markets, are likely to be strong. Korea is expected to show stable performance in the third markets, including Russia and Brazil.
General machinery exports will improve as inventories in the Chinese market will be reduced. As demand for premium TVs rises, including for ultra-high definition, organic light-emitting diode and three-dimensional TVs, exports of household appliances are likely to improve.
On the other hand, exports of oil products, display devices and petrochemical and steel products are expected to decrease.
Export circumstances for oil products worsened due to decreased global oil demand and the increased self-sufficiency of importing countries. Display devices exports are also likely to be reduced due to lowered panel prices.
Petrochemical exports are likely to be reduced slightly with accelerated competition between China and Taiwan, and computer exports will also slow with a shrunken market and increased overseas production of peripheral units.
While the sales prices of steel products continuously fall due to reduced raw material prices and over supply, exports will struggle with reinforced protectionism and China’ slowed economic growth.
MOTIE will promote various activities, including reinforcing the capability of companies to respond to crises and supporting companies to penetrate China’s domestic market, against difficult trade circumstances in the second half of the year to increase Korea’s exports.
Source: Newsis (July 19, 2013)
** This article was translated from the Korean.