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[Image source=Yonhap News]

[Asia Economy Reporter Wondara] The Export-Import Bank of Korea (KEXIM) has forecasted that export amounts in the first quarter will increase by 10-12% compared to the same period last year.

On the 7th, KEXIM's Overseas Economic Research Institute released the 'Q4 2020 Export Performance Evaluation and Q1 2021 Outlook' containing this forecast. According to KEXIM's projection, first-quarter exports are expected to rise by 10-12% year-on-year, reaching around 145 billion USD.

The export leading index stood at 120.3, marking a 2% increase compared to the same period last year and a 3.2% rise from the previous quarter. This represents a turnaround to a year-on-year upward trend after six quarters. KEXIM analyzed that the export leading index will continue its upward trend for two consecutive quarters compared to the previous quarter. The export leading index is a composite index that predicts the degree of export increase or decrease by integrating variables affecting exports such as the economic conditions of major export destinations, import amounts for exports, industry-specific order status, and exchange rates.

▲Sooeun Overseas Economic Research Institute Announcement, 'Evaluation of Export Performance in Q4 2020 and Outlook for Q1 2021'

A KEXIM official explained, "Most advanced countries such as the United States and Germany are entering a recovery phase from the economic contraction caused by COVID-19, leading to a significant rise in economic indices, while major emerging countries like China and Brazil are maintaining stable growth." He added, "With rising oil prices and an increased proportion of high-priced products (system semiconductors, electric vehicles, etc.) among key export items, export prices in dollar terms have continued to rise for two consecutive quarters compared to the previous quarter, and the year-on-year decline has narrowed."

In particular, although DRAM fixed prices have remained stable since October, reflecting recent investment increases, prices are expected to continue rising throughout 2021. Automobile exports are projected to recover due to increased demand for eco-friendly vehicles such as electric cars, and general machinery exports are expected to rebound due to economic recovery and favorable conditions in upstream industries.

However, KEXIM added, "If the global economic recovery slows due to the spread of variant viruses or delays in vaccination, the export growth rate may decrease."

Meanwhile, according to the 'Export Companies Business Survey' conducted by KEXIM from the 6th to the 13th of last month targeting 455 large and small-medium enterprises, the main difficulties faced by export companies were 'poor facilities and investment' (47.3%), 'unstable won exchange rate' (44.0%), and 'low-price competition from developing countries such as China' (24.4%). Among these, the response rate for 'unstable won exchange rate' increased by 13.8 percentage points compared to the previous quarter.

Large enterprises (51.1%) reported 'unstable won exchange rate' as the biggest issue, whereas small and medium enterprises (48.3%) cited 'poor consumption and investment in export destination countries due to COVID-19' as their greatest difficulty. In industries such as plants and overseas construction (55.0%), the highest response rate was for 'poor consumption and investment in export destination countries due to COVID-19,' while in sectors like petrochemicals (52.9%) and automobiles (49.4%), 'unstable won exchange rate' was the most frequently cited issue.

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