"South Korea's Export Recovery Continues... Export Growth Pace Slower Than Past Recovery Periods"

Bank of Korea, Report on 'Export Improvement Trends and Future Sustainability Assessment'

It is forecasted that South Korea's exports will continue to recover due to improvements in the semiconductor market and increased investments by major countries in new growth industries. However, although exports have recently revived mainly in semiconductors, the rate of export growth is slower compared to the six previous recovery periods since 2000.

On the 4th, the Bank of Korea stated in its report titled "Review of Recent Export Improvement Trends and Assessment of Future Sustainability" that "Korean semiconductor exports are expected to continue increasing in high-bandwidth and high-capacity products driven by rising demand related to artificial intelligence (AI). As demand for previously sluggish products such as PCs and smartphones gradually recovers in the second half of next year, the momentum for improvement will strengthen."

According to the report, during past recovery periods, Korean semiconductor exports sustained an upward trend for an average of about 28 months, serving as a key driver for export and growth recovery. The Bank of Korea explained, "Recently, exports of automobiles and machinery have maintained a steady trend, with semiconductors leading the improvement. However, export growth of IT final goods such as computers and smartphones is not yet clearly evident."

By region, exports to the United States are showing favorable performance, and exports to the ASEAN5 (Indonesia, Thailand, Malaysia, Vietnam, and the Philippines) are also seeing a reduction in sluggishness. Exports to China are improving mainly in semiconductors, but recovery of exports outside the semiconductor sector is delayed.

In this context, expanded investments by the United States and the European Union (EU) in new growth industries are expected to be positive factors for South Korea's exports. The US and EU are implementing industrial policies aimed at strengthening supply chain resilience for key items such as semiconductors and building advanced industrial ecosystems. Related investments to develop AI technology (semiconductors) and promote eco-friendly transitions (electric vehicles, batteries, etc.) are being massively expanded domestically, which is expected to increase Korean exports as well.

Beyond cyclical factors, changes in the global trade environment such as the reorganization of global value chains (GVC) are also expected to significantly impact South Korea's export structure. The report noted that in the US, consumption is expected to gradually slow due to sustained high interest rates, but steady investment will likely result in favorable export performance to the US in the future. Conversely, in China, ongoing real estate market weakness and rising self-sufficiency due to industrial structure advancement may make it difficult for exports to China to improve significantly as in the past.

However, the Bank of Korea added, "Sustained global high interest rates and slow recovery in goods consumption, including durable goods, could act as constraints on our exports. If China's real estate market remains sluggish despite government stimulus efforts, recovery of exports to China, especially in steel and machinery, may be delayed."

Export containers are being loaded onto a ship at Busan North Port. Photo by Kang Jin-hyung aymsdream@

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