South Korea's External Trade Ratio Surpasses 30% Again in 2018

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] In 2018, South Korea's foreign trade ratio once again exceeded 30%. With improvements in the service sector, the consumption share in final demand expanded.

According to the "2018 Input-Output Table (Extended Table) Results" released by the Bank of Korea on the 24th, the total supply (total demand) of goods and services in the South Korean economy in 2018 amounted to 507.42 trillion KRW, an increase of 4.4% compared to the previous year (486.1 trillion KRW).

The combined foreign trade ratio of exports and imports reached 30.2%, surpassing 30%. The foreign trade ratio in 2018 was 30.2%, up from 29.8% in the previous year. This is the first time in three years since 2015 (30.1%) that the foreign trade ratio exceeded 30%. The rise in raw material prices contributed to the increase in imports.

Looking into South Korea's industrial structure, the share of services has expanded.

In 2018, the composition of domestic total output showed that the service sector accounted for 46.2%, up 0.6 percentage points from the previous year. The share of manufactured goods was 43.1%, and construction accounted for 6.3%, both down 0.3 percentage points from the previous year. The share of services in South Korea's total value added in 2018 also rose by 0.9 percentage points to 60.2%. Accordingly, the consumption share in final demand increased from 46.1% in 2017 to 46.6% in 2018.

The value-added ratio, which indicates the proportion of value added in South Korea's total output, was 43.2%, down 0.3 percentage points from the previous year. As prices of imported raw materials such as crude oil and natural gas rose, the value added in industries highly dependent on these raw materials declined.

However, the employment inducement coefficient continued its downward trend. In 2018, the employment inducement coefficient was 10.1, continuing the decline from 11.2 in 2016 and 10.6 in 2017.

Due to the rise in raw material prices, increased import dependence, and lower domestic production rates and value-added ratios of intermediate goods, the production inducement coefficient (1.795→1.790) and value-added inducement coefficient (0.780→0.773) also decreased.

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