[Shaking Export Korea] Among 15 Major Items, 11... Export Growth Rate Declines in First Half

Increase rate 15.6% with 10.4%P decrease
Clear decline in automobile and petrochemical sectors
Global inflation acceleration negatively impacts

Although exports, which have driven the growth of the Korean economy, performed well enough to record an all-time high of $350.3 billion in the first half of this year, a closer look reveals that there is not much reason to smile. Among the top 15 major export items leading Export Korea, 11 items showed a decline in export growth rate compared to the previous year, indicating weakened competitiveness. There are forecasts that if the economic recession triggered by interest rate hikes in major countries intensifies in the second half of this year, the slowdown in export growth rates of Korea's key products could become even steeper.

According to the Ministry of Trade, Industry and Energy on the 1st, the export growth rate in the first half of this year was 15.6%, down 10.4 percentage points from 26.0% in the same period last year. In particular, the decline in growth rates was clear for major domestic export items such as automobiles and petrochemicals. In the case of automobiles, exports in the first half of this year amounted to $24.35 billion, a 3.2% increase compared to the same period last year, but the export growth rate during the same period fell by 46.6 percentage points, the largest drop. The main causes are analyzed to be the shortage of automotive semiconductors and the decrease in exports to the Commonwealth of Independent States (CIS) due to the Russia-Ukraine war. Auto parts also saw a 41.9 percentage point drop in export growth rate due to production disruptions of finished vehicles caused by overseas factory shutdowns triggered by the COVID-19 pandemic.

In the case of petrochemicals (-34.4 percentage points), the growth rate declined due to delays in synthetic resin exports caused by the Cargo Solidarity Union's transport strike and the rise in export unit prices due to global raw material price increases. Major export items such as home appliances (-32.0 percentage points), wireless communication devices (-16.1 percentage points), displays (-8.0 percentage points), and biohealth (-7.3 percentage points) also saw an expanded decline in growth rates. For displays, despite the expansion of mobile organic light-emitting diode (OLED) production, the reduction in liquid crystal display (LCD) production and the decline in export unit prices had a significant impact. At least semiconductors led overall exports by achieving the top spot in export value with $69.02 billion in the first half, but even this showed a 1.1 percentage point decrease in growth rate during the same period.

The problem is that if the economic recession accelerates in the second half of this year due to global inflation, the export growth margin of key products could shrink further. In fact, last month's export value recorded $60.7 billion, marking the highest performance for July, but the export growth rate was 9.4%, down 17.2 percentage points from 26.6% the previous year. Semiconductors are also experiencing demand slowdown due to reduced purchasing power caused by China's lockdowns, the prolonged Russia-Ukraine war, and high inflation. Export diversification is also expected to be difficult. Emerging countries, considered priority targets for export diversification, may be the first to be hit hard by the global economic recession.

Yoo Hwan-ik, head of the industrial division at the Federation of Korean Industries, said, "As the global economy gradually enters a recession, concerns about stagflation are growing," adding, "Major countries are lowering their economic growth forecasts, and there is a high risk that Korea's export growth rates for major items, except for some like semiconductors, will slow down."

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