Exports expected to have fallen 10%Korea’s exports will likely decline by 10.2 percent this year from the previous year, according to the Korea International Trade Association (KITA).
The trade lobby said in a report Thursday that it expects outbound shipments for this year to record $543 billion due to global trade friction and tumbling semiconductor prices, making it fall far short of the record milestone the country achieved last year of $604.9 billion.
Exports have recorded on-year declines since December last year.
“Exports will drop by around $60 billion compared to last year, and around $30 billion [of the drop] is due to semiconductor prices that have fallen by 40 percent,” said KITA CEO Kim Young-ju during a briefing at the KITA headquarters in Gangnam District, southern Seoul. “On top of this, petrochemical prices fell 10 percent from the previous year due to falling global crude oil prices.”
The KITA report said semiconductors and petroleum-related products will likely account for more than 70 percent of the export drop.
It added that Korea’s declining exports isn’t a unique phenomenon as the top 10 exporters, excluding China, will likely see a dip in outbound shipments due to a global economic downturn.
The IMF has forecast global growth for this year at 3.0 percent, the lowest since 2009 in the aftermath of the global financial crisis.
By export destination, Korea’s shipments to China fell the most by 18 percent through October this year. Shipments to the United States grew by 2.2 percent over the same period as car exports rose by 16.8 percent.
KITA also forecast imports to drop by 5.5 percent this year to $506 billion.
Despite this year’s difficulties, the trade group expects the situation to improve next year, rising by 3.3 percent to $561 billion.
It cited improved global economic conditions such as a global growth forecast of 3.4 percent by the IMF.
KITA added that semiconductor exports will improve by 10.2 percent next year thanks to increased data center demand for chips.
Analysts have also been upbeat about a recovery in semiconductor demand next year that could lift exports.
Server DRAM prices are projected to drop 5 percent on quarter and reach a trough in the fourth quarter this year,” read a report from Daishin Securities. “But that should remain flat or edge up on quarter in the first quarter next year.”
According to a report by Claire Kim, a semiconductor analyst at Hana Financial Investment, 64-gigabyte NAND chip price drops have slowed in recent months, falling by 27.4 percent in May from the previous year and by 12.3 percent in October.
She said semiconductor exports will likely start to improve in February next year due to increased demand for chips ahead of a full scale roll out of 5G phones.
BY CHAE YUN-HWAN [firstname.lastname@example.org]