This Year’s Exports Will Decline
6.4% with Uncertainties in US-China
KITA’s report, recovery of unit price will delay due to slow investment while
exports of automobiles, shipbuilding and general machinery -
Korea’s exports will be
unlikely to recover in earnest in the second half of the year, due to the
prolonged uncertainties over trade disputes between the United States and China
as well as Brexit and sluggish global investment and consumption.
The report titled ‘2019 1H
Imports and Exports and Outlook for 2H’ issued by the Institute for
International Trade (President, Shin Seung-kwan) of the Korea International
Trade Association on June 28th forecast that Korea’s exports will
decrease by 6.4 percent to 566 billion dollars and its imports will fall 4.1
percent to 513 billion dollars. Korea’s exports last year exceeded 600 billion
dollars for the first time in history, reaching 604.9 billion dollars.
According to the report, the
trade balance will see a surplus of 53 billion dollars, down from a year
earlier, as exports declined more than imports.
Among the major products, it
is expected that the recovery of semiconductors will be seen after the 4th
quarter due to delayed investment by global IT companies in the data center
because of the prolonged trade war between the United States and China. The
annual export volume is expected to stay around 100 billion dollars, down 21.1
percent from the previous year.
Exports of petrochemicals
and petroleum products are expected to decline by around 10 percent due to the
operation of new facilities in North America, and the decrease in international
oil prices and large-scale regular maintenance, respectively. Exports of steel
products will decrease in the second half of this year because of stagnant
global demand, lower unit prices with increased production in China, and
strengthened import regulations in the United States and other countries.
On the other hand, exports
of automobiles, auto parts, general machinery, and ships are expected to
increase in the second half of the year. Automobiles are expected to grow 5.2
percent annually on the back of solid growth in the US economy, expanded
exports of SUVs and eco-friendly cars, and the effects of new cars.
Shipbuilding exports are forecast to surge due to the delivery of the ships
that were ordered in 2017 and the exports of LNG / Very large crude carrier
(VLCC) will grow. Exports of general machinery will be better than last year
thanks to the expansion of infrastructure and facility investment in major
export destinations such as the United States and India.
In contrast, exports in the
first half of the year were sluggish due to the slowdown in the manufacturing
industry in China and the decline in export prices of major items. The export
prices of semiconductors and petroleum products dropped and they accounted for
more than 80 percent of total exports decrease in the first half of the year.
By country, China, which takes up one quarter of total exports, recorded
double-digit decline, accounting for more than half of the total export
Moon Byung-ki, a senior
researcher at the Institute for International Trade of the Korea International
Trade Association, said, “In the second half of the year,
Korea’s exports are unlikely to recover rapidly due to the proliferation of
protectionism with the US-China trade disputes and delays in investment because
of policy uncertainties in the global economy.” He
stressed, “Korea needs to actively respond to
short-term risks such as exchange rate, oil price, and interest rate
volatility. Korea also needs to strive to open up new markets in the new
southern and new northern countries, make materials and parts industry more
high value-added, and strengthen export competitiveness of consumer goods and