Ominous signs for the economy

Korean exports kept their strength in June with turnover at $51.23 billion. It is the first time the country shipped over $50 billion worth of exports for four months in a row. Exports reached all-time high of $300 billion in the first half of the year and fueled a surplus streak in the trade balance for the 77th straight month.

Yet the data should not be any relief. Outbound shipments have become seriously imbalanced with growth primarily led by semiconductors alone. Chip exports surged 39 percent on year and their share in total shipments shot up to 20.6 percent, more than double from two years ago. Petrochemical exports also rose for 21 months in a row.

In the meantime, other mainstay manufacturing sectors — automobile, steel and display — are all struggling. Concentration in select markets also has worsened. China was responsible for 26.6 percent of Korea’s total exports in the first half. Three markets — China, the United States and Vietnam — took up nearly half (46.1 percent) of Korean exports.

The boom in semiconductors is fizzling out. Market analyst Gartner predicts that growth in the memory chip market will slowly enter contraction in 2020. China’s industrial push by investing heavily in semiconductors and other technologies also threaten Korea. On top of that, external conditions have turned unfavorable due to trade barriers and interest rate hikes from the United States.

If exports shake while domestic demand remains sluggish and jobs decrease from the anti-business and pro-labor policies of the Moon Jae-in administration, the Korean economy could be in great danger. The government must radically remove regulations and promote new growth, but the ruling party, Blue House and government are entirely bent on keeping their labor policies. The government must tend to the fundamentals and work towards reinvigorating business sentiment.

JoongAng Ilbo, July 2, Page 30