Export Business Outlook Index Shows Positive Trend for 6 Consecutive Quarters... Bright Prospects for Automobiles, Medical Devices, and Machinery

[Asia Economy Reporter Su-yeon Woo] South Korea's Export Business Survey Index (EBSI) has exceeded the baseline for six consecutive quarters, and it is expected that the export momentum will continue into the fourth quarter of this year. However, rising logistics costs and raw material prices were identified as factors limiting export growth.

According to the "2021 Q4 Export Industry Business Survey" conducted and analyzed by the Korea International Trade Association's International Trade and Commerce Research Institute on 1,036 domestic export companies on the 30th, the EBSI for the fourth quarter was 106.0, slightly down from 113.5 in the third quarter, but still above 100, indicating that South Korea's exports are expected to maintain steady growth. A value above 100 means that export conditions are expected to improve compared to the current situation.

Export Industry Business Sentiment Index (EBSI) Trend / Data = Korea International Trade Association, Institute for International Trade and Commerce

By product category, as the global demand recovery trend continues due to vaccine distribution, exports of 10 out of the 15 major items are expected to increase, including automobiles and automobile parts (143.4), medical, precision, and optical instruments (129.0), and machinery (111.5). In particular, for automobiles, the unit price increase of eco-friendly vehicles and sports utility vehicles (SUVs) is being maintained, and machinery exports are expected to show a notable increase centered on construction and machine tools as countries worldwide invest in infrastructure to stimulate their economies.

On the other hand, petroleum products (76.3), plastics and rubber products (79.6), and chemical industries (76.3) are expected to face worsening export conditions compared to the third quarter. This is due to rising raw material prices caused by oil price increases and a reduction in demand for petroleum products as the peak season for gasoline use in the U.S. (driving season) diminishes.

By category, export contracts (113.2), export consultations (111.8), and export destination economies (109.5) are expected to improve, reflecting optimism about economic recovery in major countries due to COVID-19 vaccine distribution and increased export vitality. Conversely, export product manufacturing costs (79.0), export profitability (87.8), and export unit prices (90.6) received largely negative evaluations.

The most frequently cited export difficulties by companies for the fourth quarter were rising logistics costs (24.3%) and rising raw material prices (24.3%). In particular, concerns about rising logistics costs increased by 1.9 percentage points compared to the third quarter, indicating that the sharp rise in maritime freight rates is a significant obstacle to export companies' business activities. The Shanghai Containerized Freight Index (SCFI), one of the indicators of maritime freight rates, maintained a level around 900 before COVID-19 but rose to 2,582.42 on April 2 this year and reached an all-time high of 4,622.51 as of September 17.

Won-bin Do, a researcher at the Korea International Trade Association, said, "The EBSI for the fourth quarter is also expected to exceed 100, maintaining the export recovery trend," but added, "However, the continuous rise in maritime freight rates, difficulties in securing shipping space, and rising raw material prices are factors limiting the growth of our exports."

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