Export Outlook for Semiconductors and Automobiles in Q1 Next Year: 'Clear'

Korea International Trade Association 2024 Q1 EBSI Announcement

There is a forecast that export conditions for major items such as semiconductors and automobiles, excluding petroleum products, will improve in the first quarter of next year.

The Korea International Trade Association's International Trade and Commerce Research Institute announced the '2024 1st Quarter Export Industry Business Survey Index (EBSI)' on the 20th. EBSI is an indicator that reveals companies' outlook on export conditions for the next quarter. Based on 100, if the outlook is expected to improve (worsen) compared to the previous quarter, the value is greater (less) than 100.

In the first quarter of next year, the EBSI recorded 97.2, below the baseline (100). Many companies anticipated that export conditions for that quarter would not be favorable. However, compared to the fourth quarter EBSI of this year (90.2), the index rose, approaching the baseline, showing a gradual increase in industry expectations for export market recovery.

By item, ▲semiconductors (103.4) ▲automobiles and parts (102.4) ▲wireless communication devices and parts (110.9), among 8 items, are expected to see improved export conditions in the first quarter of next year. On the other hand, petroleum products (67.8) are expected to face worsened export conditions due to the decline in international oil prices and exchange rate fluctuations. Excluding petroleum items, the EBSI for the first quarter of next year rises to 100.4.

By category, indices for ▲export consultations and contracts (108.3) ▲international supply and demand (101.0) ▲manufacturing costs (100.3) exceed 100, reflecting expectations that overseas demand and supply conditions may improve.

Respondent companies cited ▲rising raw material prices (19.6%) ▲economic downturns in export countries (16.9%) ▲buyer price reductions (12.9%) as export difficulties for the first quarter of next year. Raw material prices have been identified as the biggest challenge for export companies for three consecutive quarters.

The KITA noted the increasing proportion of companies complaining about difficulties such as market encroachment by developing countries including China and buyers' demands for price reductions, and predicted that export competition and profitability deterioration with developing countries will continue next year.

Researcher Kim Nayul of KITA said, "Along with export companies' efforts for long-term contracts and switching import sources, the government should support improving export companies' profitability by extending tariff quotas, expanding public stockpiles, and easing conditions for deferring import VAT payments."