Korea's Exports Close in on Japan... $20.2 Billion Gap Between 5th and 6th Place

Analysis Using Preliminary Export Figures from Japan's Ministry of Finance
Korean Exports Up 9% to $622.386 Billion
Ranked 6th in Export Countries, Up Two Places
Gap with 5th Place Japan Narrows to $20.2 Billion
Exports to US and China Increase, Improving Performance
IT Market Recovery Drives Semiconductor and Other Exports

This year, South Korea's global export value increased by 9%, narrowing the gap with Japan to approximately 20.2 billion dollars. Riding on this momentum, South Korea climbed two ranks higher in the list of the world's top 10 exporting countries, securing 6th place and closely pursuing Japan, which holds 5th place.

On the 29th, the Korea International Trade Association analyzed provisional export figures from Japan's Ministry of Finance and found that South Korea's global export value from January to November this year totaled 622.386 billion dollars. The gap with Japan (642.598 billion dollars) was 20.212 billion dollars, the smallest ever recorded. This is the first time the export gap between South Korea and Japan has narrowed to the 20 billion dollar level.

The export gap between the two countries decreased from 303.6 billion dollars in 2010 to 155.2 billion dollars in 2013, and then remained in the 100 billion dollar range for eight years until 2021 (111.6 billion dollars). After that, it recorded 63.24 billion dollars in 2022, 85.035 billion dollars last year, and reached an all-time low this year.

According to the Korea Trade-Investment Promotion Agency (KOTRA), in the ranking of the world's top 10 exporting countries from January to October this year, South Korea ranked 6th and Japan 5th. South Korea fell from 6th place in 2022 to 8th last year but recovered to 6th this year, while Japan has maintained 5th place for the past three years.

This year, South Korea's export performance improved significantly due to a substantial increase in exports to the United States, China, and ASEAN countries, which account for 54.9% of total exports. Kim Nayul, a researcher at the Korea International Trade Association, explained, "The recovery of the IT sector led to a significant increase in South Korea's semiconductor and computer exports, and the global demand for items such as cosmetics and pharmaceuticals expanded, contributing to narrowing the export gap with Japan."

However, the general industry view is that the strong export performance seen this year is unlikely to continue into next year. Factors such as the base effect, protectionism under a potential second Trump administration, and intensified US-China conflicts cast a shadow over South Korea's export outlook for next year.

Trade conflicts between South Korea's two major export markets, the United States and China, have intensified protectionism, and South Korean companies are actively relocating overseas production bases not only to the US but also to Europe and Southeast Asia. Amid this, concerns are rising that the export growth rate will slow next year due to the base effect following this year's 9% export growth.

Major domestic and international institutions also predict South Korea's export growth rate next year to be around 1 to 3%, expecting weaker export growth momentum compared to this year. The Korea International Trade Association also stated regarding next year's export-import outlook, "Global IT demand will continue in exports such as semiconductors, wireless communication devices, and computers, likely resulting in performance exceeding this year," but added, "Downward pressure on exports is increasing due to the base effect from strong automobile exports, increased overseas production, and the decline in oil product prices."