Korea's Exports Face Dark Clouds in Q1 Next Year... Triple Challenges of Demand, Costs, and Financing

Q1 at 81.8... Fourth Consecutive Quarter Below 100
"Need to Expand Export Financing and Ensure Exchange Rate Stability"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] A survey found that companies believe it will be difficult for the export industry to recover next year as well.

The Korea International Trade Association announced on the 25th that the Export Business Survey Index (EBSI) for the first quarter of next year recorded 81.8. A value below 100 means that the outlook is worse than the previous quarter.

The report analyzed that the rapid economic contraction and the decline in EBSI were due to steep inflation and interest rate hikes by major countries in response.

By category, many respondents expected further deterioration in export product manufacturing costs (71.1), export destination countries' economies (79.9), international supply and demand (81.1), and financial conditions (84.0).

For these reasons, export companies are suffering from a 'triple burden' of sluggish demand due to economic recession, rising manufacturing costs, and worsening financial difficulties.

By item, except for ships (146.5), the EBSI for all items fell below 100. Ship exports are expected to increase as orders rise due to expanded demand for European liquefied natural gas (LNG) carriers.

The EBSI for automobiles and automobile parts was 99, showing relatively good performance. Increased demand for electric vehicles and improvements in logistics difficulties served as driving forces to withstand the economic slowdown.

Petroleum products (55.7) and home appliances (49.7) were among the lowest indices due to the impact of falling international oil prices, persistent inflation, and interest rate hikes.

Companies reported difficulties in securing profitability and establishing management strategies due to increased buyer demands for price reductions and expanded exchange rate volatility.

On the other hand, as raw material prices decline and maritime freight stabilizes, difficulties related to rising raw material prices and logistics costs are decreasing.

Kim Kkotbyeol, senior researcher at the Korea International Trade Association, emphasized, "As countries around the world engage in high-intensity tightening, trade is rapidly contracting," adding, "Considering the triple burden on export companies, efforts should be made to support export financing and defend against exchange rate fluctuations."

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