Weak yen didn’t dent Korean exports

The weak yen didn’t affect Korea’s trade, while Japan saw its largest deficit last year, said a report by the Korea Institute for Industrial Economics and Trade.

The report comparing Korean and Japanese trade showed that Korea posted its largest trade surplus of $44.1 billion last year, while Japan logged its biggest deficit of $117.6 billion.

During the year, many expected that the weak yen would help expand exports by ramping up Japanese products’ price competitiveness.

But it also made imports more expensive, and Japan’s worst deficit stemmed largely from increased imports of raw materials.

Although Japan’s exports rose 9.5 percent last year, imports rose 15 percent, surpassing export growth.

The low yen caused an increase in the import prices of crude oil, gas, petrochemical products, iron ore and other energy sources, the report said. Japan’s imports of energy sources spiked after the 2011 earthquake, tsunami and nuclear plant explosions that led to the turning off of the country’s nuclear plants.

The Japanese government had expected growth in exports of important products like automobiles and auto parts because of the yen’s depreciation, but exports of leading products actually fell from 2012 through 2013.

Automobile exports fell 7.4 percent, and auto parts 11.3 percent. Ship exports plunged 32.1 percent.

Despite about a 10 percent decrease year-on-year in export prices of those products, export volumes barely expanded 0.6 percent in the third quarter of last year.

Since the inauguration of the Shinzo Abe administration in October 2012, the yen-dollar rate shot up from 79.03 yen (0.77 cents) to 103.45 yen in December 2013.

Last year alone, the currency depreciated 22.3 percent compared to the previous year.

This is contrary to between 2004 and 2007 when the yen was weak and Japan saw growing trade surpluses, while Korea’s surpluses shrank.

During that time, Japan’s trade balance had surpluses hovering around $70 billion, while Korea’s trade surplus dropped from $29.4 billion in 2004 to $14.6 billion in 2007.

The report gave credit to the increased competitiveness of Korean products, especially semiconductors and mobile phones.

Korean-made semiconductors posted double-digit growth unlike rival Japanese chips. Smartphones and communications devices expanded, becoming No. 1 in the global market.

Korea’s ship exports fell 5.5 percent in a sluggish market, but the report said that was actually a good performance considering the world market. It credited Korean shipbuilders differentiating their ships from competing ships coming from Japan, which mitigated the low yen advantage.

Korea’s total exports kept growing last year, up 0.7 percent in the first quarter, and 4.7 percent in the fourth quarter.

However, the report said that Japanese companies are seeing rising profits thanks to the currency advantage and could expand their shares in the global market in the long run.

By SONG SU-HYUN [ssh@joongang.co.kr]