Concerns Over Worsening Exports in Computer, Petrochemical, and Biohealth Sectors Starting Late This Year

FKI Conducts Export Outlook Survey on 15 Key Items Targeting Heads of Research Centers at 12 Securities Firms

Data provided by the Federation of Korean Industries

[Asia Economy Reporter Kim Heung-soon] While this year's export performance has recorded an all-time high, it is expected that exports of secondary batteries, automobiles, semiconductors, ships, and auto parts will maintain a strong trend through next year, whereas exports of computers, petrochemicals, displays, bio-health, and home appliances may see a slowdown in the second half of this year.

The Federation of Korean Industries announced on the 8th that this was the result of a survey on export prospects for 15 major items conducted among research center heads of 12 securities firms.

Strong Export Trend of Secondary Batteries, Automobiles, Semiconductors, Ships, and Auto Parts to Continue for the Time Being

According to the survey, items expected to maintain strong export trends included secondary batteries (22.0%), automobiles (13.6%), semiconductors (12.0%), ships (10.5%), and auto parts (9.4%).

Secondary batteries showed the longest expected duration of export strength, with 40.0% expecting it to continue 'beyond 2024' and 30.0% expecting it through the 'second half of 2023.' This is attributed to the rapid growth of the global electric vehicle market and the competitiveness secured by Korean companies. For automobiles and auto parts, 62.5% and 57.1% respectively expected the trend to last until the 'second half of next year.'

Semiconductors, which hold the highest share of Korea's exports, are expected to maintain export growth until the 'first half of next year' (63.6%) due to strong demand centered on DRAM. However, there is also a possibility that the growth trend may slow down afterward due to price declines.

Opinions on ships were divided among 'first half of next year' (33.3%), '2023' (33.3%), and '2024' (16.7%). This is interpreted as reflecting expectations for global economic recovery and increased demand for eco-friendly ships, predicting continued order growth until the first half of 2022.

Data provided by the Federation of Korean Industries

"Export Strength of Computers, Petrochemicals, Displays, Bio-Health, and Home Appliances May Not Last Long"

The top five items expected to see the earliest decline in export strength were computers (16.7%), petrochemicals (15.4%), displays (12.3%), bio-health (11.1%), and home appliances (8.6%).

Among these, items expected to decline starting from the second half of this year included bio-health (60.0%), home appliances (57.1%), computers (50.0%), and petrochemicals (40.0%). Bio-health, which had benefited from a surge in demand for diagnostic kits, is expected to see exports slow down due to the expansion of COVID-19 vaccination.

Displays are forecasted to enter a downward trend starting next year (40.0% in the first half and 40.0% in the second half). Fields such as computers and home appliances, which recorded strong performance due to the benefits from COVID-19, are also expected to experience gradual demand slowdown.

Experts identified 'global demand decline' (36.0%) as the biggest threat to Korea's export industries, followed by 'US-China hegemonic conflict' (27.7%) and 'spread of protectionism' (13.9%). Regarding what is most needed to maintain export competitiveness, the most common response was 'government efforts to improve trade conditions with major export countries' (38.9%), followed by 'improvements in corporate environment such as deregulation and tax reductions' (33.3%) and 'expanded support for R&D investment to strengthen industrial competitiveness' (27.8%).

They pointed out that to sustain the current export strength even if global demand decreases in the future, it is necessary externally to improve trade conditions in export countries and internally to improve regulations. Kim Bong-man, head of international cooperation at the Federation of Korean Industries, said, "We hope our government actively responds to the US-China hegemonic conflict and the spread of protectionism to support Korean companies, which are highly dependent on exports, so that they can conduct business activities more actively."