BOK: "Korean Exports on the Rise... China's Growth Slowdown and Omicron Pose Risks"

This Year's Exports Weaken Compared to Last Year Due to Reduced Base Effect After COVID-19

[Asia Economy Reporter Seo So-jung] The Bank of Korea stated that South Korea's exports are currently maintaining a solid upward trend in the rising phase and are expected to continue a steady flow for the time being.

However, risks such as the slowdown in China's growth and the potential weakening of global economic sentiment due to the spread of Omicron are expected to act as constraints on exports.

In the report titled "Recent Trends and Evaluation by Export Situation Judgment Indicators" released on the 3rd, the Bank of Korea predicted, "Considering the recent trends of export situation judgment indicators comprehensively, our exports are currently in a solid upward trend in the rising phase and will continue a steady flow for the time being."

The Bank of Korea estimated that since 1990, South Korea's exports (based on volume) have experienced seven cycles, and the current export economy is in the rising phase of the eighth cycle (since April 2020).

As of December last year, the rising phase has been ongoing for 1 year and 8 months, which is shorter than the past average rising phase duration (1 year and 11 months), and it is judged that the export economy has not yet passed its peak.

By product category, most items are estimated to be in the expansion phase of the export economic cycle.

However, chemical products and steel are in the contraction phase; the slowdown in chemical products is attributed to the decline in exports of pharmaceuticals and diagnostic kits that surged immediately after the spread of COVID-19, and the steel sector is analyzed to be affected by China's real estate market slowdown and power shortages.

The OECD Global Business Confidence Index, known as a leading indicator of exports, remains at a high level, and the Leading Economic Index shows a gentle decline slightly above the trend level.

Additionally, the global manufacturing (new export orders) Purchasing Managers' Index (PMI), which declined in the first half of last year, showed a slight rebound toward the end of the year, supporting the positive export outlook.

Furthermore, the Export Industry Business Outlook Index (Korea International Trade Association EBSI), which reflects domestic companies' export outlook for the next quarter, rose at the end of last year, and by product, the export business outlook for semiconductor companies, which have a significant impact on total exports, greatly improved.

Considering forecasts from major institutions such as the International Monetary Fund (IMF) and the World Trade Organization (WTO), the Bank of Korea expects export conditions this year to weaken compared to last year as the base effect from the COVID-19 crisis diminishes, but to maintain a level better than the long-term trend.

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