Korea’s exports at risk as global trade tensions continue
- 6 years ago
The Bank of Korea in its report to the National Assembly today,.... pointed to global trade uncertainty as a major challenge to the economy.
And for more on recent developments surrounding global trade and Korea's exports,.... we have our business correspondent Kim Hye-sung joinig us in the studio today.
(Hello Hye-sung/ Hi Ji-yoon)
So first, can you tell us why the Bank of Korea and the government are so worried about exports?
Right, exports are key... as THE main driver of Korea's economy. Last year, Korea's economy grew by three-point-one percent, passing the three-percent mark for the first time in three years thanks to exports. They hit an all-time high of 573-point-nine billion U.S. dollars, accounting for about two thirds of Korea's GDP.
In the first half of this year, Korea continued this export growth momentum, shipping 297.5 billion dollars' worth of goods, another record high and an increase of six-point-six percent on-year.
But when you look at the specific numbers,... you see how it's very reliant on one product -- semiconductors.
Take a look at this graph.
Semiconductor exports increased by nearly 43 percent, followed by machinery and petrochemical exports.
But most of Korea's other leading exports, like ships and home appliances fell by double digits.
Without semiconductors, which accounted for more than a fifth of the total, export growth in the first half of this year would be a mere one-tenth of a percent.
With chipmakers cutting down on facilities investment, and the industry possibly nearing the end of the two-year semiconductor supercycle that started in late 2016,... Korea's export growth could actually fall sharply if semiconductor exports start to slow down.
On top of this, we have the ongoing trade tensions between Korea's top two trading partners, the U.S. and China, and growing protectionism in the EU... which add downside risks to Korea's exports.
As an export-driven economy, Korea ranked sixth among countries most at risk from a trade conflict between Washington and Beijing, showing how vulnerable it is to global trade environment.
Just to give you another number, Fitch Ratings says a full blown trade war between the G2 could result in the loss of 2 trillion U.S. dollars in global trade flows... and reduce global growth by zero-point-four percent this year.
And for more on recent developments surrounding global trade and Korea's exports,.... we have our business correspondent Kim Hye-sung joinig us in the studio today.
(Hello Hye-sung/ Hi Ji-yoon)
So first, can you tell us why the Bank of Korea and the government are so worried about exports?
Right, exports are key... as THE main driver of Korea's economy. Last year, Korea's economy grew by three-point-one percent, passing the three-percent mark for the first time in three years thanks to exports. They hit an all-time high of 573-point-nine billion U.S. dollars, accounting for about two thirds of Korea's GDP.
In the first half of this year, Korea continued this export growth momentum, shipping 297.5 billion dollars' worth of goods, another record high and an increase of six-point-six percent on-year.
But when you look at the specific numbers,... you see how it's very reliant on one product -- semiconductors.
Take a look at this graph.
Semiconductor exports increased by nearly 43 percent, followed by machinery and petrochemical exports.
But most of Korea's other leading exports, like ships and home appliances fell by double digits.
Without semiconductors, which accounted for more than a fifth of the total, export growth in the first half of this year would be a mere one-tenth of a percent.
With chipmakers cutting down on facilities investment, and the industry possibly nearing the end of the two-year semiconductor supercycle that started in late 2016,... Korea's export growth could actually fall sharply if semiconductor exports start to slow down.
On top of this, we have the ongoing trade tensions between Korea's top two trading partners, the U.S. and China, and growing protectionism in the EU... which add downside risks to Korea's exports.
As an export-driven economy, Korea ranked sixth among countries most at risk from a trade conflict between Washington and Beijing, showing how vulnerable it is to global trade environment.
Just to give you another number, Fitch Ratings says a full blown trade war between the G2 could result in the loss of 2 trillion U.S. dollars in global trade flows... and reduce global growth by zero-point-four percent this year.