KITA News and Reports
  • 1 Trillion Dollars in Trade for 2 Straight Years … Exports of Semiconductors about to Reach 100 Bill
    2018-07-04

    1 Trillion Dollars in Trade for 2 Straight Years … Exports of Semiconductors about to Reach 100 Billion Dollars for the First Time

    - Uncertainties such as the US trade pressure, interest rate hike, the US-China trade disputes are

    still remaining -

     

     

    Korea is expected to reach 1 trillion dollars in trade value for the second consecutive year. Semiconductor is expected to exceed 100 billion dollars in exports for the first time as a single product.

     

    According to a report titled ‘Assessment of Imports and Exports in 1H of 2018 and Prospects for 2H’ issued by the Institute for International Trade (President, Shin Seung-kwan) of the Korea International Trade Association, Korea is expected to secure 1 trillion dollars in trade for two consecutive years as this year's exports of Korea reached 605 billion dollars, increased by 5.5 percent from last year, and its imports recorded 531 billion dollars, increased by 11 percent year-on-year. Export growth is expected to slow down slightly from 6.4 percent in the first half of the year to 4.6 percent in the second half due to the recent slowdown in export unit prices increase and the base effect of shipbuilding exports and semiconductor boom that were concentrated last year.

     

    Exports of flagship items are expected to remain brisk in the second half of the year on the back of the upward trend in global economic growth, robust IT boom, and rising oil prices. Semiconductors are expected to continue to be strong in the second half of the year, with annual exports exceeding 100 billion dollars for the first time as a single item. However, it is forecast that the export growth will be somewhat sluggish dropping to16.6 percent in the second half of the year as China will ramp-up the memory production following the massive investment in the industry and the base effect of the export boom.

     

    Since petrochemicals, petroleum products, computers and general machinery remain strong and the decreased exports of automobiles and automobile parts will turn to increase and the exports of mobile phones and display will decline slightly in the second half of the year, Korea’s exports will be less dependent on semiconductors. It means that the contribution of the exports of semiconductors to Korea’s total exports will decrease from 82.1 percent in the first half of the year (January~May) to 68.2 percent in the second half. 

     

    It is concerned that export uncertainties, such as trade pressure from the United States, the spread of protectionism due to the US-China trade disputes, and the economic uncertainty in emerging economies following the acceleration of the US interest rate hike will continue in the second half of this year. In fact, after the United States set quotas for Korean steel based on the US import regulation, Korea’s exports of steel products to the United States have dropped sharply since March, and the exports of washing machines and solar cells, that are subject to safeguards, were 50 percent and 16.6 percent, respectively between January and May.

     

    The report stated, "Export items in the first half of the year were significantly diversified as high value-added items such as new industries related to the fourth industrial revolution and promising consumer goods did well." Exports of eight new industries, including electric cars, bio-health and advanced materials, stood at 25.6 billion dollars increased by 29.2 percent year-on-year. The top five promising consumer goods such as agricultural and fishery products, household goods, cosmetics, pharmaceuticals and fashion apparel also recorded an increase of 18.6 percent with 11.5 billion dollars, exceeding the overall export growth rate of 8.1 percent.

     

    Moon Byung-ki, a senior researcher at the Institute for International Trade of KITA stressed, “In order to maintain solid exports in the second half of the year, Korea needs to actively respond to short-term risks such as trade protectionism, exchange rate and interest rate volatility, and strengthen the exporters through the high value-added strategy for materials and parts industries, including steel, chemical and textile as well as the diversification of the market by utilizing free trade agreements networks.

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