Q2 Export Growth Expected to Slow Amid Rising Global Uncertainty

Q2 Export Industry Business Sentiment Index (EBSI) at 96.1... Falls Below 100 for the First Time in 8 Quarters

[Asia Economy Reporter Park Sun-mi] Due to the Russia-Ukraine conflict and the surge in raw material prices, it is forecasted that South Korea's exports will slow down somewhat in the second quarter.

According to the "2022 2nd Quarter Export Industry Business Outlook Survey" conducted and released on the 27th by the Korea International Trade Association's International Trade and Commerce Research Institute, which surveyed 1,287 domestic export companies, the Export Business Sentiment Index (EBSI) for the export industry in the second quarter of this year stood at 96.1, falling below 100 for the first time in eight quarters since the second quarter of 2020 (79.0). An index below 100 indicates that export conditions are expected to worsen compared to the current situation.

By product category, exports of eight items including wireless communication devices (70.9), petroleum products (75.2), steel and non-ferrous metal products (81.1), and semiconductors (88.1) are expected to deteriorate. The report explained that the recent escalation of the Russia-Ukraine conflict and the sharp rise in international raw material prices have expanded global uncertainties, which are the main factors.

On the other hand, sectors such as shipbuilding (148.8), automobiles and automobile parts (127.0), daily necessities (112.5), and chemical industry (111.9) showed indices exceeding 110, forecasting further export expansion in the next quarter. This was analyzed to be contributed by the steady order flow in the shipbuilding industry and the continuous increase in demand for eco-friendly vehicles. Electrical and electronic products (109.2) and medical, precision, and optical instruments (108.3) are expected to maintain levels similar to the previous quarter.

In the evaluation of export conditions, seven out of ten items, including "manufacturing cost of export goods" (72.3), "international supply and demand situation" (76.5), and "import regulations and trade friction" (81.4), forecast a worsening export environment.

Regarding export difficulties in the second quarter, "raw material price increases" (27.3%) and "logistics cost increases" (25.2%) accounted for more than half of the total. Notably, in all 15 surveyed product categories, rising raw material and logistics costs were identified as the top two difficulties, confirming that supply chain and logistics disruptions are the biggest recent obstacles to exports.

Kim Min-woo, senior researcher at the Korea International Trade Association, stated, "Global uncertainties will continue for the time being due to the Russia-Ukraine conflict and the surge in raw material prices. Our companies must closely monitor the supply situation and price trends of raw and subsidiary materials, while thoroughly managing risks through inventory expansion and diversification of import sources."

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