Government Confident in Export Recovery... But US and Europe COVID Resurgence Poses Variable

Oxford University’s 'COVID-19 Government Response Tracker' Rebounds
Q4 Korean Exports May Be Hampered by Dependence on External Demand

The "COVID-19 Government Response Tracker" produced by the University of Oxford in the UK. The darker the color, the stronger the government's response.

[Asia Economy Reporter Kim Eun-byeol] As the average daily exports in October turned positive for the first time in nine months, our government expressed an upbeat mood, saying "the recovery trend continues." However, concerns are rising that export routes to the US and Europe may narrow again due to the resurgence of COVID-19.

According to the 'COVID-19 Government Response Tracker' produced by Oxford University in the UK on the 1st (local time), the government response index in major European countries such as the UK, France, Spain, and the US has recently rebounded. Oxford University measures the index on a scale from 0 to 100 to assess the extent of government measures in response to COVID-19. The index is calculated by monitoring school and business closures, travel bans, event cancellations, gathering restrictions, public transportation suspensions, and financial support. A higher score indicates a stronger government response to the spread of COVID-19, which also implies stricter lockdown measures.

The UK’s government response index, which had risen to 73 in June, fell to the mid-60s in August but has recently increased again to around 70. France also saw its index drop to 51 in mid-July before rebounding to 60 at the end of last month. On October 31st (local time), the UK announced a second lockdown, and the three major European countries?Germany, France, and the UK?have all decided to implement lockdown measures. The Italian government is also considering reissuing lockdown orders, making it highly likely that lockdown severity in Europe will increase further.

The resurgence of COVID-19 in the US is also steep. The daily confirmed cases in the US are close to 100,000, with cumulative cases exceeding 9 million. Although lockdown measures are not being imposed ahead of the presidential election, if the resurgence continues, states will have no choice but to consider lockdowns. The US government response index, which had dropped to 66 in mid-September, has risen to 72.

A senior official from the Bank of Korea said, "If lockdown measures are imposed, it will inevitably be difficult to sell our main products such as automobiles and smartphones overseas," adding, "It is difficult to forecast export prospects as the COVID-19 situation this winter is unpredictable."

While Korea’s high external demand dependence worked positively in the third quarter, there is analysis that it will become a hindrance in the fourth quarter. Park Sung-woo, an analyst at DB Financial Investment, said, "External demand is expected to act as a downside risk in the fourth quarter," explaining, "This is because COVID-19 is intensifying again, especially in Europe, and movement restrictions are being strengthened."

Meanwhile, according to the Ministry of Trade, Industry and Energy, the average daily export amount last month was $2.142 billion, up 5.6% from the previous year. Although total exports last month decreased by 3.6%, the government is focusing on the fact that average daily exports turned positive for the first time in nine months. The government plans to announce an 'Export Digital Transformation Plan' this month to shift the export system to digital and online platforms and intends to make every effort.

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