Choo Kyung-ho "Difficult to Be Optimistic About Exports in the Second Half"... Government Adds 40 Trillion Won in Trade Finance

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kim Hyewon] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said on the 3rd, "We will expand trade finance for export-oriented small and medium-sized enterprises (SMEs) and mid-sized companies by more than 40 trillion won compared to the original plan for this year."

Deputy Prime Minister Choo held the 3rd Emergency Economic Ministers' Meeting at the Government Seoul Office and stated, "We will do our utmost to ensure that exports, the growth engine of our economy, continue to show a high growth rate." At the meeting attended by key ministers from related government departments, they reviewed the recent economic situation and export-import trends and discussed countermeasures.

Deputy Prime Minister Choo said, "The export performance in the first half of this year set a record high for a half-year period, and compared to the first half of last year, when we began to recover fully from COVID-19, it recorded a double-digit high growth rate, showing favorable results in terms of total amount." However, he added, "Looking closely at the detailed data and future conditions, it is difficult to be optimistic about the export situation in the second half."

He assessed that the acceleration of global tightening is slowing growth in major countries including the United States, and global trade volume is expected to contract, raising concerns about weakening export growth in key items. He noted, "The fact that raw material prices remain at a high level is also a burden," adding, "Cost burdens are increasing mainly for small export companies, and export profitability is deteriorating, which may limit export performance."

He continued, "The prolonged Ukraine war is causing ongoing instability in global supply chains, and export logistics costs such as air and maritime freight remain high, so the conditions faced by export companies will not be easy in the second half."

The government decided to expand trade finance for export SMEs and mid-sized companies by about 15.3%, from the planned 261.3 trillion won this year to more than 301.3 trillion won, in response to increasing external risks such as rising logistics burdens and raw material prices. Trade finance support from January to May this year amounted to about 130 trillion won.

Deputy Prime Minister Choo also emphasized, "We will focus on alleviating the logistics burden of small export companies through support for SME logistics costs, deployment of temporary vessels, expansion of dedicated shipping space for small shippers, and expansion of joint logistics centers."

To improve trade structure and expand the trade base, the government plans to pioneer new markets such as Europe and Southeast Asia and discover and nurture new promising export items such as eco-friendly and advanced materials, parts, and equipment. They will also activate digital trade and foster service trade sectors such as content and healthcare.

Deputy Prime Minister Choo said, "We will strengthen policy efforts to fundamentally and structurally enhance export competitiveness by intensively reforming regulations centered on the Economic Regulatory Innovation Task Force (TF)." He added, "To ease labor shortages in the export industry, we will also promote improvements in working hour systems and visa system reforms to expand foreign employment."