Hankyung Association: "More Than Half of Large Corporations Expect Export Growth in the Second Half of This Year"

Export Outlook Survey for Top 1000 Revenue Companies
63.2% of Respondents Expect "Export Increase" in Second Half
"Export Growth" in Shipbuilding, Petrochemicals, Biohealth, etc.
Positive Factors Include Industry Improvement and New Technology Development

More than half of our major corporations expect exports in the second half of this year to increase compared to the same period last year.

The Korea Economic Association (KEA) announced on the 1st that, based on a '2024 Second Half Export Outlook Survey' conducted by Mono Research, a market research specialist, targeting the top 1,000 companies by sales operating in 12 major export industries, 63.2% of the responding companies expected exports to increase compared to the same period last year.

By industry, more than half of the companies in shipbuilding (100.0%), petrochemicals (75.0%), biohealth (72.7%), auto parts (70.0%), electrical and electronics (68.3%), general machinery (54.5%), and automobiles (50.0%) anticipated export growth in the second half of the year. The reasons cited for export growth included 'increased demand due to improved business conditions' (35.4%) and 'strengthening product competitiveness through new technology development' (15.6%).

On the other hand, in steel (46.2%) and petroleum products (0.0%), more companies expected exports to decline. Companies anticipating export decreases pointed to 'weakened export competitiveness due to rising raw material and oil prices' (33.9%) and 'economic downturn in major export destinations such as China' (25.0%) as key factors.

However, 8 out of 10 responding companies (79.0%) expected export profitability (the nature of generating profit by balancing income and expenses) in the second half of this year to be similar (50.0%) or worse (29.0%) than in the second half of last year. Particularly, many responses indicated profitability would weaken in industries such as petroleum products, biohealth, petrochemicals, electrical and electronics, steel, and general machinery. Factors contributing to profitability deterioration included 'rising prices of raw materials such as crude oil and minerals' (38.7%), 'reduction in export unit prices' (22.7%), and 'increased import costs due to exchange rate rises' (13.6%). Conversely, industries expected to see improved profitability included shipbuilding, automobiles, and auto parts.

Korea Economic Association (HanKyungHyup) [Image source=Yonhap News]

Risks affecting exports in the second half of this year were identified as 'rising raw material prices' (29.0%), 'delayed demand recovery due to global low-growth trends' (27.6%), and 'continued Russia-Ukraine war and expansion of Middle East conflicts' (15.1%). Especially if oil price instability persists in the second half of this year, companies are expected to respond by 'reducing selling, general and administrative expenses and operating costs' (40.8%), 'raising product prices' (21.7%), and 'diversifying supply chains' (20.4%).

Companies also anticipated the appropriate KRW/USD exchange rate to secure export profitability in the second half of this year to be an average of 1,332 won. Additionally, preferred government policies to strengthen export competitiveness included 'measures to stabilize the foreign exchange market' (19.6%), 'tax support related to raw material imports' (17.9%), 'expanded tax support such as corporate tax cuts and investment credits' (17.5%), 'support to prevent logistics disruptions' (13.2%), and 'expansion of policy finance' (12.5%).

Lee Sang-ho, Head of the Economic and Industrial Division at KEA, said, "Exports in the second half of this year are expected to continue growing due to the strong performance of key export items such as semiconductors. However, uncertainties remain high due to economic slowdowns in major export destinations like the U.S. and China, exchange rate instability, intensified semiconductor competition, geopolitical risks, and elections in major countries."