Gwangju Region's Export Sentiment Expected to Improve in the Second Half of the Year

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] The sentiment of export companies in the Gwangju region for the second half of the year is expected to "improve" due to the base effect from last year's poor performance.

The Gwangju Chamber of Commerce and Industry (Chairman Jeong Chang-seon) conducted a survey titled "2021 Second Half Export Company Business Outlook" targeting 117 export companies in the Gwangju area. The results showed that 35.9% of respondents believed the business sentiment would "improve" compared to the same period last year, the highest response rate.

This is analyzed to be due to some improvement in the global economic downturn compared to last year when export performance significantly deteriorated due to the COVID-19 pandemic, along with increased vaccination rates in major countries, improved consumer and investment sentiment, and growing expectations for economic recovery.

However, the response rate for the export outlook being "worsened" was also high at 31.6%, which appears to be due to prolonged economic downturn caused by COVID-19, rising international raw material prices, supply disruptions, and increased logistics and transportation costs.

Regarding first half performance, 37.6% of respondents said "export volume increased" compared to the same period last year, followed by "similar to the same period last year (34.2%)" and "export volume decreased (28.2%)."

Companies that responded "export volume increased" reported an average increase of about 24.9% compared to the same period last year, while those who said "export volume decreased" reported an average decrease of 35.2%.

By industry, the "Chemical, Rubber, and Plastics" and "Food, Agriculture, Forestry, and Fisheries" sectors expected export conditions in the second half to "improve" compared to the same period last year, while the "IT and Electronics" and "Household Goods" sectors expected conditions to "worsen." The "Automobile (Parts)," "Machinery and Molds," and "Steel and Metal Processing" sectors forecasted conditions to be similar to the same period last year.

The "Chemical, Rubber, and Plastics" sector anticipated positive export prospects due to increased demand volumes from export countries such as China, and the "Food, Agriculture, Forestry, and Fisheries" sector expected export growth driven by expanded COVID-19 vaccination and the hosting of the Tokyo Olympics, which is expected to stimulate consumption.

However, the "IT and Electronics" sector forecasted a negative outlook for the second half due to continued increases in COVID-19 cases in major export countries like the EU, leading to reduced consumption and rising raw material costs. The "Household Goods" sector also had a negative outlook due to prolonged global economic downturn and sharp increases in logistics costs.

Regarding the use of Certificates of Origin (C/O) to benefit from FTA tariff advantages, 81.2% of respondent companies said they are "using or plan to use Certificates of Origin," with 74.4% currently using them and 6.8% planning to use them. Companies not using Certificates of Origin accounted for 18.8%.

As the utilization rate of FTAs among local companies increases, the number of FTA Certificate of Origin issuances is also on the rise. Over the past five years, the number of FTA Certificates of Origin issued by the Gwangju Chamber of Commerce and Industry has increased annually, and the performance for the first half of this year also rose by 8.9% compared to the same period last year.

Among export companies without experience issuing FTA Certificates of Origin, 68.2% cited "the benefits of using FTAs are not significant for our company" as the reason. Other reasons included the main export countries not being FTA partner countries (13.6%), the burden of preparing and submitting documentation for FTA utilization (9.1%), and lack of knowledge about how to use FTAs (4.5%).

The biggest domestic and international risks expected to most significantly impact local export companies in the second half were "raw material price increases" at 64.1%. Other major risks included restrictions on business activities due to COVID-19 (51.3%), rising logistics costs (44.4%), increased labor costs (35.9%), economic downturns in export countries (31.6%), and expanded exchange rate volatility (17.9%).

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