Martial Arts: "Exports Also 'Clear' in Q3 This Year... Export Uptrend Continues in the Second Half"

[Asia Economy Reporter Su Su-yeon] The Export Business Survey Index (EBSI) recorded above 110 for the third consecutive quarter, indicating that South Korea's exports are expected to continue their strong performance in the second half of the year.

According to the 3rd and 4th quarter 2021 Export Business Survey conducted by the Korea International Trade Association's International Trade and Commerce Research Institute, which analyzed 1,201 domestic export companies, the EBSI for the third quarter of this year was 113.5, exceeding 110 for the third consecutive quarter following 112.1 in the first quarter and 120.8 in the second quarter. An index above 100 means that export conditions are expected to improve compared to the present, suggesting that exports in the third quarter will maintain a solid growth trend.

By product category, exports of 12 out of the 15 major items are expected to increase as oil prices rise and global demand recovery continues, including automobiles and automobile parts (145.5), ships (135.3), and petroleum products (134.2). In particular, automobile exports are expected to increase mainly in sports utility vehicles (SUVs) and electric vehicles, ships in liquefied natural gas (LNG) carriers and ultra-large container ships, and petroleum products in transportation fuels such as aviation fuel and heavy oil. On the other hand, exports of steel and non-ferrous metal products (98.8), agricultural and marine products (98.7), and plastic and rubber products (88.1) are expected to decline slightly compared to the second quarter.

By category, export consultations (122.7), export contracts (119.4), and export destination countries' economies (117.1) are expected to improve, reflecting optimism about economic recovery in major countries due to COVID-19 vaccine distribution and expectations for revitalizing export momentum. Conversely, conditions such as export profitability (97.9), export unit prices (95.2), and manufacturing costs of export goods (83.1) are expected to deteriorate somewhat due to the continued rise in raw material prices.

The most frequently cited export difficulties by companies in the third quarter were rising raw material prices (24.6%) and increasing logistics costs (22.4%), which rose by 3.5 percentage points and 2.1 percentage points respectively compared to the second quarter.

Dobinwon, a researcher at the Korea International Trade Association, said, "With the index exceeding 110 in the third quarter, the export recovery trend is expected to continue into the second half of the year. However, the continuous rise in raw material prices and logistics costs will be factors that partially constrain the growth of our exports."