[Click eStock] "Export Slump Dampens Domestic Growth... Hinders Economic Expansion"

Contribution of Pure Export Growth Turns Negative
Especially China Exports Act as Major Cause
Export Decline Expected to Continue, Time Needed for Domestic Demand Growth

South Korea's export growth rate is showing a downward trend, causing the contribution of net exports to growth to shift into negative territory. While private consumption has made some positive contributions, declines in construction investment and facility investment are acting as constraints on domestic demand growth. In particular, given the high correlation between facility investment growth and export growth, there is a possibility that continued export sluggishness could weaken the momentum of domestic demand growth.

On the 6th, LS Securities researchers Kwanghyuk Choi and Hyeyoung Woo stated, "Exports of semiconductors and automobiles are declining, leading to a slowdown in export growth rates to the U.S. and China." They added, "Especially, the decrease in exports to China is cited as a major cause of the overall export decline in November." On the other hand, a rebound in export growth rates has been observed in regions such as the Middle East, Europe, and Latin America, highlighting the need for attention to industries related to these areas.

Since October, U.S. Treasury yields have risen, but Korean government bond yields have remained stable, continuing a decoupling phenomenon. The Bank of Korea identified this as resulting from the differential impacts of the Trump administration's second-term fiscal expansion policies and concerns over economic and price slowdown within Korea. Meanwhile, foreign investment in Korean government bonds has expanded, maintaining favorable supply and demand conditions in the government bond market.

According to LS Securities, the export decline is likely to continue into the first half of 2025, suggesting that it will take time for domestic demand growth to offset the export sluggishness. Regionally, opportunities are being sought in Europe, the Middle East, and Latin America, and in the government bond market, attention should be paid to the stability arising from increased foreign demand.