KITA News and Reports
  • Exports Hit the Bottom
    2019-03-27

    Exports Hit the Bottom

     

    - 2Q EBSI stood at 99.9 export conditions for ships, cars and oil will improve -

     

     

    While the exports in the second quarter is remaining the same level as that of the previous quarter, there are signs of improvement in some items such as ships, automobiles, and petroleum.


     

    According to the report titled 2019 Second Quarter Export Business Survey Index (EBSI) issued by the Institute for International Trade (President, Shin Seung-kwan) of the Korea International Trade Association on March 31th based on a survey of 932 local export companies, the EBSI for the second quarter stood at 99.9 and signaling that the sharp decline has stopped. The first quarters EBSI was 93.1.


     

    The index below 100 indicates that the export conditions will be worse than now.


     

    By item, the report forecast that the exports of steel and nonferrous metal products, electrical and electronic products, agricultural and marine products, machinery and semiconductors will deteriorate. In particular, steel products are facing difficulties due to import regulations in the United States and EU as well as intensifying competition with China. Moreover, the conditions for semiconductors are still difficult to turnaround due to falling unit prices and delayed demand recovery from global IT companies. 


     

    In contrast, shipbuilding exports are expected to improve significantly from the second quarter thanks to the delivery of the orders placed in 2017. The exports of petroleum and chemical industries that were sluggish in the first quarter are also expected to increase as export prices rise with the international oil price hikes.


     

    By item, 'import regulation · trade conflicts' (87.3) and 'export profitability' (89.7) are expected to worsen. In the case of import regulations and trade conflicts, the industries insecurities regarding the US-China trade negotiations that do not seem to have clear agreements have been reflected. On the other hand, export consultations (102.2), export contracts (102.5) and economies of export destinations (101.0) are expected to improve slightly from the first quarter.


     

    Export companies selected rising raw material prices (18.4%), buyers' demand for price cuts (15.4%) and sluggish economies of export destinations (10.6%) as the main difficulties in the second quarter.


      

    Yoo Seo-kyung, a researcher at the Institute for International Trade of the Korea International Trade Association, said, EBSI for the second quarter has remained at the same level as the first quarter, and stressed, The sluggish demand due to the global economic slowdown will continue for a while. Therefore, companies are required to make efforts such as strengthening export marketing to overcome the difficult export conditions.   

     


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