Korea’s exports are expected to have increased five percent this year to US$680 billion, bumping up the country from seventh to sixth largest trading nation in the world. The country’s exports of cars and petroleum products have risen to fresh record highs, and semiconductor shipments are expected to set a new benchmark. Exports to the U.S., India and ASEAN have also set a new record, with shipments to the U.S. surpassing $100 billion for the first time.
Dec. 5 marked the 59th year since Korea’s annual exports surpassed $100 million back in 1964. But the atmosphere of celebration was marred by a record trade deficit of $42.6 billion until November this year due to snowballing import costs of crude oil, gas and coal. In other words, all of the money Korea made by selling products was used up paying for energy imports.
A closer look at the stellar export figures also shows some troubling developments. Exports have now fallen for two straight months due to the global economic slump, with a 14 percent plunge in November. Coronavirus lockdowns in China, which accounts for 23 percent of Korea’s exports, have had a huge impact, while demand for semiconductors is waning due to the slowing global economy.
The situation does not look promising in the months ahead. Nine out of 10 Korean exporters in a survey by the Federation of Korean Industries said prospects are bleak over the next six months. Korea’s economy could fall into a slump if exports slow down any more. The Bank of Korea as well as global analysts forecast the country’s economic growth will slow to the one-percent range in 2023. The best way to boost economic growth is to help businesses recover vitality, but that is impossible as long as red tape remains a burden. The main opposition Minjoo Party, which controls a majority of National Assembly seats, is only interested in passing laws that suffocate businesses. A bill designed to aid the semiconductor industry has been waiting for parliamentary passage for the past four months. In these circumstances Korea is squandering its advantages.
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