• Exports are expected to grow 3.0% next year despite concerns about global economic uncertainties
    2018-12-04 hit 865

    Exports are expected to grow 3.0% next year despite concerns about global economic uncertainties


    - KITA’s report, semiconductors, vessels, petrochemicals lead exports… trade protectionism, monetary tightening, uncertainties in emerging markets are obstacles - 



    Despite the steady growth of global economy and continuous global IT demand, it is expected that Korea's exports will slightly slowdown in 2019 compared to this year due to the trade conflict between the U.S. and Chinese, US interest rate hikes, and the possibility of financial instability in emerging economies.



    The Institute for International Trade Association of the Korea International Trade Association (President, Shin Seung-kwan) states in the report titled "The Assessment of 2018 Export and Import and Outlook of 2019’issued on November 29th that next year, Korea’s exports are expected to reach 625 billion dollars, an increase of 3.0 percent, and its imports will reach 557 billion dollars, up 3.7 percent, achieving 1 trillion dollars for the third consecutive year.


    By item, exports of semiconductors are expected to exceed 130 billion dollars for the first time as a single item, driven by the demand for data center server products and the growth of new markets such as Artificial Intelligence (AI), Internet of Things (IoT), and unmanned vehicles. However, the export growth rate is anticipated to slow down to 5 percent from this year’s 30 percent due to the unit price decline of semiconductors. Vessels are expected to grow 10 percent year-on-year on the back of increased orders received over the past two years and the base effect of the last year’s sluggish growth. Petrochemicals are expected to grow 5.2 percent due to the expansion of exports following the operation of new domestic facilities. The exports of general machinery are also expected to increase due to the expansion of investment in infrastructures in major countries such as China, the United States, and India, while the exports of computers are also anticipated to grow with the increased demand for cloud servers and SSDs for enterprises.


    In case of vehicles, there are positive factors such as the launch of new models and the increase in demand for environmentally-friendly cars and SUVs. However, the exports are expected to remain at the same level as last year because of the reduced demand for sedans, concerns over emerging economies stemming from US interest rate hikes. Despite the strong demand for organic light emitting diodes (OLED), the exports are forecast to decline by 2.2 percent due to the price drop caused by oversupply of liquid crystal displays (LCDs), which account for 60 percent of the total. The exports of wireless communications equipment and household appliances will continue to decline due to the expansion of overseas production and intensified competition with China. The exports of steel will continue to decrease imports due to the import regulations of the United States.  



    In 2018, it is expected that Korea’s trade will maintain its position as the 6th largest exporter in the world with 1 trillion dollars of trade volume for two consecutive years and exceeding 600 billion dollars of exports for the first time in history. Semiconductors, general machinery, and petrochemicals are expected to achieve the largest export performance, while the trade surplus of material and parts has already exceeded 100 billion dollars. In particular, semiconductor exports recorded the highest growth rate among the major countries by securing technological competitiveness through preemptive research and development (R & D) investment. When it comes to memory, Korea has the largest share of the global export market and has the outstanding technology. In the system semiconductor field, the results of Korean companies’ efforts to reinforce foundry (contract production of semiconductors) business and diversify overseas market are becoming visible.



    Moon Byung-ki, a senior researcher at the Institute for International Trade for the Korea International Trade Association said, “Korea’s exports will continue to grow next year, but there are considerable uncertainties such as the global trend of trade protectionism, Brexit, tighter monetary policies in advanced countries, and the possibility of the U.S. imposing high rate of tariff on cars.” He also stressed, “Korea must aggressively respond to short-term risks such as volatility expansion of exchange rate and interest rate, be prepared for trade risks through high value-added strategies for materials and parts industries and free trade agreements (FTA) and strengthen export competitiveness of Korean products, including enhancing export competitiveness of consumer goods and new industries.”


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