Report from the Institute of International Trade and Commerce in Martial Arts
Q3 EBSI 108.4...Strong Performance for Second Consecutive Quarter
Ships and Semiconductors Lead Among Items
Export Consultations, Contracts, and Gyeonggi Province as Export Destination Expected to Grow
Concerns Over Rising Raw Material Prices and Logistics Costs
Despite ongoing wars in the Middle East and trade frictions between the United States, the European Union (EU), and China, our companies are expected to continue showing strong export performance in the third quarter of this year.
Cover of the "2024 Q3 Export Industry Business Outlook Survey" report published by the Korea International Trade Association International Trade and Commerce Research Institute. Photo by KITA
According to the business community on the 19th, the Korea International Trade Association's Institute for International Trade and Commerce forecasted in its '2024 Q3·Q4 Export Industry Business Outlook Survey (EBSI)' report released the previous day that the EBSI for the third quarter would record 108.4, continuing the export growth trend from the previous quarter.
The EBSI is an index analyzed based on a survey of our export companies' outlook on export conditions for the upcoming quarter. Using 100 as the baseline, a value above 100 indicates an expected improvement from the previous quarter, while a value below 100 indicates a deterioration. The EBSI, which recorded 116 in the second quarter, exceeding 100, also showed a value above 100 in the third quarter, confirming that companies’ expectations for export growth remain high.
By item, 12 out of the top 15 major items recorded values above 100. This is an increase of four items compared to eight items that showed values above 100 in the second quarter. This means that export conditions are expected to improve significantly in the third quarter. In particular, the increase in orders for high value-added ships such as LNG carriers and ammonia carriers, along with the expanded demand for memory semiconductors due to growth in the artificial intelligence (AI) industry, led to the highest export growth expectations in ships (139.8) and semiconductors (125.2). Additionally, steel and non-ferrous metals (112.3) are expected to show a clear recovery compared to the previous quarter (90.7). On the other hand, geopolitical tensions in the Middle East continue, and concerns over disruptions in crude oil supply remain unresolved, so petroleum products (71.8) are expected to face somewhat deteriorated conditions.
By category, exports are expected to improve in five areas including export consultations and contracts (116.7) and the economic conditions of export destination countries (115.6). Conversely, due to intensified conflicts between the U.S./EU and China, prolonged Red Sea incidents, and rising sea freight rates caused by surging logistics costs from China, there were more negative views on import regulations and trade frictions (73.5) and international logistics conditions (86.4).
The main export difficulties in the third quarter, as in the previous quarter, were cited as rising raw material prices (19.7%) and increased logistics costs (15.3%). Among these, the volatility of the won-dollar exchange rate, influenced by uncertainties such as the U.S. interest rate cuts and instability in the Middle East, showed the largest increase (+2.5 percentage points) compared to the previous quarter, reflecting the heightened interest of the trade industry in exchange rate fluctuations.
Kim Gyuwon, a researcher at the Korea International Trade Association, said, "It is a positive sign that the export recovery trend is spreading to many items, including steel and non-ferrous metals, where concerns about overproduction by competing countries were high and sentiment is improving." He added, "However, to sustain the export growth trend, thorough monitoring and preparation for external variables such as global protectionist measures and major countries’ elections are necessary."
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