Q4 Exports Expected to Be Led by Recovery in ASEAN and China Markets

ASEAN Expected to See Export Recovery Across All Industries Including Semiconductors, China Promising in Textiles and Machinery

[Asia Economy Reporter Hwang Yoon-joo] Our export companies have identified ASEAN, China, and other major Asian markets as the key markets to lead the recovery of export conditions after the COVID-19 pandemic.

According to the "Impact of COVID-19 on Export Companies and Export Recovery Outlook" report released on the 15th by the Korea International Trade Association's International Trade and Commerce Research Institute (Director Choi Yong-min), based on a survey of 1,051 domestic export companies, companies expect the trade environment to improve most significantly in the fourth quarter and beyond in the markets of "ASEAN" (25.2%) and "China" (20.0%). The proportion of respondents expecting a deterioration in the trade environment was 14.6% for ASEAN and 17.5% for China, indicating that expectations for improvement outweighed concerns about worsening conditions. In contrast, the European Union (EU), the United States, and Japan showed greater expectations for deterioration than improvement.

The report explained, "As manufacturing in China and ASEAN shows a moderate recovery recently, and government investments for economic stimulus are expanding, export companies have high expectations for these two markets."

In particular, ASEAN is expected to see improved export conditions across all industries, including key export sectors such as semiconductors, wireless communication devices, and home appliances, suggesting a robust export recovery from the fourth quarter onward.

China, the largest export market, is expected to see improved export conditions mainly in textiles and machinery, while the EU is expected to see improvement in petroleum products and home appliances, and the U.S. in agricultural and marine products and semiconductors in the fourth quarter and beyond.

Regarding the timing of a full-scale export recovery, 27.5% of respondents anticipated the first half of 2021, and 41.5% expected the second half of 2021, due to the normalization and prolongation of the COVID-19 crisis. However, in the June survey, 75.1% of companies predicted exports would decrease by more than 10% in the second quarter, but as companies' responses to COVID-19 improved, the September survey showed that 60.7% expected exports to decrease by more than 10% in the second half, indicating a somewhat eased negative outlook on export conditions.

Meanwhile, companies reported that in March, the early stage of the COVID-19 spread, logistics disruptions and raw material supply issues were major difficulties, but these problems have mostly been resolved due to charter flights and the lifting of movement restrictions. Recently, "decreased overseas market demand" (30.7%) was cited as the biggest challenge, with companies responding through "discovering new trading partners" (21.4%), "adjusting domestic and overseas production volumes" (19.7%), and "expanding untact exchanges" (17.5%).

For future export recovery, demand for government and related agency support was highest for "trade finance support" (25.8%) and "export-import logistics and customs clearance support" (21.7%). Since the impact of COVID-19 varies by industry and company size, a customized support system tailored to each company is needed.

Kang Sung-eun, a researcher at the Trade Association, stated, "As the difficulties companies face change with the prolonged COVID-19 situation, close monitoring is necessary," adding, "Tailored export marketing support measures should be devised focusing on major Asian regional markets such as ASEAN and China."

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