Hyundai Research Institute "Export Growth Rate May Slow Down from September This Year"

Export containers are loaded onto a ship at Busan North Port. Photo by Kang Jin-hyung aymsdream@

South Korea's exports are expected to grow by 9.3% this year, overcoming last year's slump, but the growth rate is projected to slow down starting in September.

On the 26th, Hyundai Research Institute released a report titled "Strengthening Export Economic Resilience - Risk Factors and Outlook for Exports in the Second Half," stating that although South Korea's export economy has recorded seven consecutive months of growth, the recovery level is not strong when considering the base effect.

The report forecasted that the global economy's entry into a low-growth phase will constrain the expansion of South Korea's exports. It analyzed that as the global economic growth rate declines, South Korea's export growth will decelerate.

The spread of protectionism was also cited as a factor hindering South Korea's export growth. Due to the spread of protectionism, the trade elasticity, which indicates the extent to which trade contributes to economic growth, is expected to fall from 1.3 last year to 0.9 this year.

Economic uncertainties in the United States and China, which account for 42% of South Korea's exports (based on last year), are also negative factors for South Korea's exports.

Accordingly, the institute analyzed that while South Korea's export economy is in a phase of overcoming last year's slump this year, the degree of export recovery in the second half is unlikely to be as high as expected.

The institute expects the export growth rate this year to be 9.3%, but the strength of the recovery will vary depending on the extent of global low growth, the spread of protectionism, and uncertainties between the U.S. and China.

In a neutral scenario, the export growth rate is expected to slow down from September, and in a pessimistic scenario, it is pointed out that negative growth rates may be recorded by December.