Exports to Surpass $700 Billion This Year, 'Record High' Expected... Exchange Rate Peaks at 1,250 Won

Semiconductor, Petrochemical, and General Machinery Exports Expected to Perform Well
Won-Dollar Exchange Rate Forecasted at 1180~1230 Won This Year

[Asia Economy Reporters Kim Heung-soon and Jang Se-hee] In the Year of the Black Tiger (Im In-nyeon, 壬寅年), South Korea's exports are expected to surpass $700 billion, setting another all-time record. The strong global economic recovery and solid performance in key sectors such as semiconductors, petrochemicals, and general machinery are likely to sustain the export momentum. The won-dollar exchange rate is also anticipated to exceed 1,200 won in the first half of this year, which could further boost the earnings of export companies.

According to the trade industry on the 4th, this year's export value is expected to increase by about 10% compared to last year's record high of $640 billion. The Korea International Trade Association's Institute for International Trade and Commerce forecasts that the total trade volume, combining exports and imports, will reach $1.2652 trillion, surpassing last year's $1.25 trillion. Factors driving export growth include the phased return to normal life (With Corona) leading to global economic recovery, improved import demand from advanced countries such as the U.S. and Europe, continued expansionary policies by major countries, and strengthened global cooperation through agreements like the Regional Comprehensive Economic Partnership (RCEP). On the other hand, challenges include global supply chain disruptions, China's slowing economic growth rate, rising inflation in major countries, and the expansion of U.S.-China trade disputes and protectionism.

According to the Korea Institute for International Economic Policy, exports of ICT products such as semiconductors and displays, petrochemicals, and general machinery are expected to perform well. In particular, semiconductor exports are projected to increase by 2.0% year-on-year to $125.5 billion. This is largely due to rising foundry (semiconductor contract manufacturing) prices and expanded production capacity, which could boost system semiconductor exports. Petrochemical exports are expected to rise by 1.7% year-on-year to $55.7 billion. Conversely, among the 13 major export items, steel (-9.0%), auto parts (-1.0%), ships (-5.0%), and home appliances (-8.0%) are expected to face export declines due to price drops, semiconductor supply shortages, reduced orders, and expanded overseas production.

This year, the won-dollar exchange rate is expected to fluctuate between 1,180 and 1,230 won. Oh Chang-seop, a researcher at Hyundai Motor Securities, stated, "Due to U.S. monetary tightening and foreign dividend remittance demand, the exchange rate is expected to exceed 1,200 won in the first quarter," adding, "If the Fed raises its benchmark interest rate and the U.S. economy remains strong, the rate could rise even further." He projected a short-term peak around 1,250 won. As expectations for interest rate hikes grow, investors' risk appetite tends to weaken, increasing the value of the dollar, which is considered a representative safe-haven asset.

In the second half of the year, the dollar is expected to remain strong due to robust U.S. economic growth and the widening interest rate gap between the U.S. and Europe. Jeon Gyu-yeon, a researcher at Hana Financial Investment, forecasted, "The first half will see a slight decline, but in the second half, as tightening policies intensify, the exchange rate will gradually rise in a V-shaped pattern."

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