"Export Growth Rate Expected to Slow This Year Due to Regulations and Rising Labor Costs"

Survey of Companies by Hankyung Yeon Shows Overall Export Growth Rate of 3.2%

[Asia Economy Reporter Lee Hyeyoung] The export growth rate, which led the Korean economy last year by surpassing the largest scale ever, is expected to remain in the 3% range this year.

The Korea Economic Research Institute (KERI) under the Federation of Korean Industries announced on the 2nd that, based on a '2022 Export Outlook Survey' commissioned to market research firm Monoresearch targeting companies, exports this year are expected to increase by 3.2% compared to last year.

The survey was conducted among 150 companies from the top 1,000 companies by sales revenue, focusing on 12 major export-driven industries (from November 24 to December 22 last year).

This export growth rate forecast is significantly lower compared to the 26.6% export growth rate from January to November last year.

National institutions such as the Bank of Korea and the Korea Development Institute (KDI) also expect a sharp slowdown, forecasting export growth rates of 1.1% and 4.7%, respectively, according to KERI.

By industry, the growth rates were estimated as follows: general machinery and shipbuilding 8.1%, electrical and electronics 5.4%, biohealth 2.2%, steel 2.1%, petrochemicals and products 1.7%, and automobiles and parts 1.1%.

Among the surveyed companies, 58.7% expected exports to increase this year compared to last year, while 41.3% anticipated a decrease.

Among companies expecting an increase, 73.2% cited "revitalization of trade due to global economic normalization and transition to with-COVID-19" as the reason. Other reasons included "increase in export unit prices due to inflation" (9.6%), "weakening export competitiveness of major competing countries" (5.6%), and "improved price competitiveness due to won depreciation" (4.0%).

Conversely, companies anticipating a decrease in exports expressed concerns about "weakened export competitiveness due to institutional factors such as corporate regulations and rising labor costs" (28.9%), "deterioration of the economic situation in export destination countries" (27.6%), "diplomatic issues such as US-China conflicts and Korea-Japan conflicts" (16.4%), "production disruptions due to damage to global supply chains" (13.2%), and "base effect from last year's high export performance" (16.4%).

Regarding export profitability outlook, 52.7% expected it to be similar to last year, while 29.3% anticipated deterioration, exceeding the 18.0% who expected improvement. Companies expecting deterioration cited causes such as "rising prices of raw materials like crude oil and minerals" (47.4%), "increased logistics costs including higher shipping rates" (26.3%), and "increased exchange rate volatility" (11.4%).

Companies identified export environment risks this year as "rising raw material prices" (36.4%), "resurgence of COVID-19" (33.8%), "diplomatic issues such as US-China and Korea-Japan conflicts" (13.5%), "expanded won-dollar exchange rate volatility" (5.1%), and "expansion of protectionism" (3.1%).

Regarding policies to strengthen export competitiveness, the most common response was "stabilization of prices including raw material prices" (55.1%). This was followed by "addressing diplomatic issues such as US-China and Korea-Japan conflicts" (15.8%), "expansion of financial and tax support" (10.7%), and "support for discovering emerging markets and diversifying export destinations" (8.7%).

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