Martial Arts "8 Items with Over 90% Import Dependence from Israel"... Need for Supply Chain Preparedness

Martial Arts, Report Published on the Domestic Economic Impact of the Israel-Hamas Conflict

As the war between Israel and the Palestinian armed group Hamas continues, there are calls to prepare for supply chain risks, focusing on items with high import dependence on Israel.

On the 15th, the Korea International Trade Association's International Trade and Commerce Research Institute stated in its report titled "Domestic Economic Impact of the Israel-Hamas Conflict" that although the share of Israel and Palestine in South Korea's trade is very small and the direct impact of this conflict on trade may be limited, there is a need for prior preparation against supply chain risks.

Based on data from January to August this year, Israel accounts for only 0.37% and 0.27% of South Korea's exports and imports respectively, while Palestine's share in exports and imports is below 0.01%. However, some items such as bromine and aircraft radio direction finders show a high import dependence on Israel.

Based on January to August 2023

Bromine, used in various industries including flame retardants and oil and gas drilling, had an import dependence on Israel of 99.6% as of January to August 2023. Since bromine is also produced in countries such as the United States, Jordan, China, and Japan, it is necessary to respond by switching import sources to these countries in case of supply disruptions. Aircraft radio direction finders (such as drone radars and GPS) also have a 94.8% import dependence on Israel, raising concerns about supply disruptions if the conflict prolongs.

If the Israel-Hamas conflict continues, causing international oil and natural gas prices to rise, there is a risk of worsening South Korea's trade balance and increased inflationary pressure. International oil prices slightly rose (around 4%) immediately after the conflict began and have since stabilized, but natural gas prices surged significantly (around 16%) and remain at high levels.

The report stated, "If the Israel-Hamas conflict prolongs, there remains a possibility of oil price increases due to other Middle Eastern oil-producing countries' involvement in the war, damage to oil production facilities, and transportation routes," adding, "if international oil prices rise by 10%, South Korea's exports and imports could increase by 0.2% and 0.9% respectively, potentially worsening the trade balance." It also added, "If energy prices such as crude oil and natural gas rise by 10%, domestic companies' production costs could increase by 0.67%, which may exert inflationary pressure."

Meanwhile, if operations of advanced sector companies, including Intel's CPU factory in Israel, are suspended, there are concerns that the recovery period for the semiconductor industry could be delayed due to weakened semiconductor demand. Intel's Kiryat Gat plant in Israel accounts for 11.3% of Intel's total semiconductor production capacity. If this plant's operation is halted, the demand for memory semiconductors from South Korean companies, which is linked to CPU demand, will inevitably be affected.

Do Wonbin, a researcher at the Korea International Trade Association, said, "Although Russia and Ukraine had a low direct trade share with South Korea, they affected our economy through various channels such as supply chain disruptions of specific items like neon and krypton and rising energy prices," advising, "It is necessary to identify and prepare in advance for potential problems that may arise if the Israel-Hamas conflict prolongs."

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