[Asia Economy Reporter Hwang Yoon-joo] It is forecasted that South Korea's exports will increase by 6.0% next year, and trade volume could recover to 1 trillion dollars. This is attributed to the global recovery, a moderate rise in oil prices, and the base effect from this year's export decline.
The Korea International Trade Association's International Trade and Commerce Research Institute projected in its '2020 Export-Import Evaluation and 2021 Outlook' released on the 2nd that next year, South Korea's exports will increase by 6.0% to reach $538.2 billion, while imports will rise by 5.4% to $490.1 billion.
By product category, semiconductor exports are expected to grow by 5.1%, surpassing the $100 billion mark, driven by increased demand from the transition to a digital economy and the expansion of the 5th generation mobile communication (5G) smartphone market. In particular, while memory semiconductor exports remain robust, system semiconductor exports are also expected to increase due to rising domestic orders amid a global foundry supply shortage. Automobile and parts exports are anticipated to show double-digit growth centered on eco-friendly vehicles and sports utility vehicles (SUVs), supported by global economic recovery and the base effect.
The report stated, "International oil prices are expected to remain in the mid-$40s per barrel next year, leading to a rebound in petrochemical and petroleum product exports." It added, "Especially in petrochemicals, exports are expected to increase centered on synthetic resins due to a significant rise in demand for disposable products caused by COVID-19."
It further explained, "Exports of biosimilars, vaccines, and quarantine supplies are expected to continue increasing due to the impact of COVID-19, and with the acceleration of the transition to a digital economy, next-generation storage device (SSD) exports are projected to perform well again next year following this year’s strong performance."
On the other hand, "Despite increased demand for high value-added organic light-emitting diode (OLED) displays, exports of displays are expected to grow by only 1.7% next year due to a decline in domestic production of liquid crystal displays (LCDs). Exports of wireless communication devices and home appliances are also expected to decrease due to expanded overseas production and intensified competition with China," the report noted.
Kim Young-joo, Chairman of the Korea International Trade Association, stated, "Among the top 10 global exporting countries, all experienced export declines this year, but South Korea recorded the second-best performance after China, excluding intermediary trading countries like Hong Kong." He added, "Especially in the second half of the year, exports showed a strong rebound, leading the overall economic recovery."
He continued, "By quickly responding to changing consumption trends after COVID-19, exports of non-face-to-face industries and home economy-related products performed well. There were also positive outcomes such as an increase in the export share of small and medium-sized enterprises and improvement in dependence on Japan for key materials and parts."
Chairman Kim emphasized, "This year, the Trade Association opened and operated a comprehensive support center for corporate entry and exit and a comprehensive response center for export-import logistics to support the movement of personnel and goods. It also supported the expansion of air and maritime transport by utilizing idle passenger aircraft and additional ships for the shipping industry, and converted offline export consultation meetings into online video consultations, implementing various projects to overcome the COVID-19 crisis." He added, "Next year, reflecting the ongoing COVID-19 situation and the acceleration of digital trade, the business direction will focus on non-face-to-face, public-private cooperation, and field-customized approaches, providing comprehensive support to 'overcome the COVID-19 crisis and achieve export growth and vitality recovery.'"
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