Hankyung Research Institute "Exports of 7 Major Export Sectors to Slightly Increase Year-on-Year This Year"

Semiconductor, Shipbuilding, and Automobile Exports Increase... Display, Wireless Communication, Steel, and Petrochemical Decrease

[Asia Economy Reporter Ki-min Lee] It is forecasted that the export value of seven major export industries, including semiconductors, will slightly increase this year compared to last year.

The Korea Economic Research Institute under the Federation of Korean Industries (FKI) announced on the 5th that such results came out during the "2020 Export Outlook and Activation Tasks Meeting" held on the 30th of last month at the FKI building in Yeongdeungpo-gu, Seoul, attended by policy department heads of export-leading industry associations.

According to a survey conducted by the Korea Economic Research Institute among policy department heads of industry associations, the export value of seven major export industries including semiconductors is expected to reach $271.2 billion this year, a 2.16% increase from last year's $265.4 billion. In particular, the semi-annual export outlook for these seven major export industries shows a high-low pattern, with exports expected to decrease by 4.1% in the first half but increase by 9.1% in the second half of the year.

Industries with export increases are ▲Semiconductors (9.0%) ▲Shipbuilding (7.0%) ▲Automobiles (3.9%), whereas industries with export decreases are ▲Petrochemicals (-3.1%) ▲Steel (-5.0%) ▲Wireless Communication Devices (-6.4%) ▲Displays (-10.0%).

As factors for export growth by industry, semiconductors cited the full-scale deployment of 5G and increased exports of system semiconductors; shipbuilding pointed to the favorable LNG market conditions leading to increased orders for LNG carriers; automobiles noted expanded new model launches and recovery in the global automobile market.

On the other hand, display exports declined due to reduced LCD volumes and price drops; wireless communication devices faced export decreases due to the relocation of domestic production plants overseas and intensified competition with China. Additionally, steel exports were negatively affected by difficulties in raising product prices and a slowdown in global steel demand, while petrochemicals faced supply expansion due to large-scale new production facilities in the US and China, contributing to export decreases.

The Korea Economic Research Institute noted that considering the 15.6% export decline of the seven major export industries last year, this year's 2.16% export growth forecast is merely a slight rebound due to the base effect. The forecast excludes the impact of the novel coronavirus, and if the related situation prolongs, exports are expected to deteriorate rapidly.

Especially, excluding semiconductors, this year's export value is expected to decrease by 1.59% compared to last year, indicating that the semiconductor-centered export trend is likely to continue this year, the institute analyzed.

The Korea Economic Research Institute reported that industry association officials participating in the outlook survey stated, "Regarding the spread of the novel coronavirus, if the situation prolongs, adverse effects on exports are inevitable," adding, "Production disruptions due to parts supply issues for Korean companies with factories in China, as well as concerns over domestic demand contraction in China and a global economic downturn, are worrisome."

Policy department heads of industry associations ranked the priority tasks for export activation as ▲Improvement of quality and design ▲Diversification of export items and regions ▲Building networks with local companies. The priorities for government support tasks were ▲Efforts to ease global protectionism ▲Support for pioneering new export markets ▲Collection and provision of information to expand exports.

This content was produced with the assistance of AI translation services.