South Korea’s exports are expected to rise 3.3 percent next year on the back of global economic recovery and rising memory chip prices, a local trade association said Thursday.
The Korea International Trade Association said exports are forecast to stand at $561 billion in 2020 with imports of $522 billion, growing 3.3 percent and 3.2 percent on-year, respectively.
This year’s exports are expected reach $543 billion while imports are estimated at $506 billion, down 10.2 percent and 5.5 percent on-year, respectively, due to the global economic slowdown, falling oil prices and declining chip prices.
Next year, exports will be fueled by the recovery of chip prices, according to KITA, as demand is expected to pick up and inventories are predicted to stabilize from the second quarter of next year. Chips account for a large proportion of the nation’s exports.
Chip exports are expected to be $105 billion, up 10 percent on-year, with memory chips and non-memory chips expected to rise 3.4 percent and 2.1 percent, each centering on China and Vietnam.
“The chip export growth will be boosted by full-fledged 5G mobile network services and solid demand for data center investment by major tech companies,” said Kim Kun-woo, a senior researcher at KITA, in a recent report.
Auto shipments, another major export item, are expected to grow 2.2 percent to reach $44.1 billion in 2020.
“In response to the growing demand for global eco-friendly vehicles and sport utility vehicles, Korean carmakers are expected to promote the electrification of existing models and expand SUV models,” Kim said.
Concerns still exist, however.
Delays in corporate investment and household consumption are expected to continue due to rising trade protectionism, such as the US-China trade dispute. There are concerns about a prolonged recession in emerging economies and slowing growth in Europe due to the possibility of a global slowdown, the report noted.
In the long term, Korea should be more strategic in the global trade market, which has seen a paradigm shift over the past decade, KITA Chairman Kim Young-ju said.
“It is hard to expect Korea to survive on global trade by relying only on exporting intermediate goods in the future,” the KITA chairman said in a press briefing.
“China -- Korea’s largest export destination -- started producing intermediate goods instead of importing them, while labor costs are rising in emerging nations, such as Vietnam, and the portion of labor costs is decreasing due to technology development,” he said.
“We need to promote more advanced, new industries, such as electric vehicles and batteries, which other countries cannot follow.”
Also, Korea should emphasize service sector exports, which have been relatively weak until now, by promoting its platforms, data-based services, and health care and tourism industries, he said.
By Shin Ji-hye (email@example.com