• This Year’s Exports Will Decline 6.4% with Uncertainties in US-China
    2019-06-28 hit 605

    This Year’s Exports Will Decline 6.4% with Uncertainties in US-China

    Trade War

    - 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 decrease.  


    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 new industries.






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