[Asia Economy Reporter Joo Sang-don] As positive signals emerge for exports, such as the easing of global uncertainties and the recovery of semiconductor prices, there is a diagnosis that active government support policies are needed to further accelerate the export recovery trend.
Recently, the Korea Institute for Industrial Economics and Trade (KIET) released a report titled "Recent Improvement in Export Conditions and Assessment of Recovery Possibility," which contains this content. KIET analyzed in the report that with the 2020 Phase One US-China trade agreement and the improving trend of major Chinese economic indicators, along with the clear recovery of semiconductor prices, the possibility of South Korea's exports recovering to an increasing trend is becoming higher.
On the 15th, the US and China signed the Phase One trade agreement. This partially resolved the uncertainties caused by the US-China trade dispute that had tense effects on the global economy for over two years. KIET expects that the easing of the greatest uncertainty in the global economy will have a positive impact not only on the world economy but also on South Korea's exports. Furthermore, this resolution of uncertainty is expected to act as an incentive to resume previously postponed investments, mainly in advanced countries and China, positively affecting South Korea's exports of intermediate and capital goods.
Kim Jae-deok, Associate Research Fellow at KIET, said, "If ICT-related investments such as global IT companies expanding data centers increase, it will accelerate the recent recovery trend of semiconductor prices and significantly contribute to the increase in our exports." However, he added, "There is also a possibility that competition with US products may intensify in some items due to the trade agreement's key points, such as China's commitment to increase imports from the US and tariff removals, creating a favorable export environment for US products in the Chinese market."
Major global market research institutions expect the global semiconductor market size to shift from a 10?15% decrease last year to a 5?10% increase this year. Since semiconductors account for about 20% of South Korea's exports, the rise in semiconductor prices due to increased demand is expected to have a significant impact on South Korea's exports. The degree of semiconductor price recovery is thus the key to the overall export rebound.
Associate Research Fellow Kim emphasized, "There are still conflict factors in US-China trade issues, and continuous response systems and strengthened monitoring are necessary for global uncertainties such as Japan's export restrictions and Brexit." He added, "It is necessary to review the results of last year's comprehensive export revitalization policies and continuously explore additional support policies reflecting the policy demands of export companies where support is needed."
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