Export Slump to Deepen in Second Half... Exports Expected to Fall 3.8% Year-on-Year

Annual Exports Expected to Fall by 2.2% Year-on-Year
Semiconductors, Automobiles, and Petroleum Likely to Decline
"Challenging Conditions Ahead as Mutual Tariff Suspension Expires"

There are projections that exports in the upcoming second half of the year will remain sluggish, with ongoing uncertainties in the global trade environment expected to maintain the current "low in the first half, lower in the second half" trend.

According to the "2025 First Half Export-Import Assessment and Second Half Outlook" report released by the Korea International Trade Association (KITA) Institute for International Trade and Commerce on June 22, exports in the second half are forecast to reach $335.5 billion, down 3.8% from the previous year, while imports are expected to decrease by 2.1% to $313.2 billion. The report projected that exports in the first half of this year would remain nearly flat at -0.6%, but anticipated a deeper downturn in the second half, resulting in total annual exports for 2025 declining by 2.2% ($15.1 billion) year-on-year to $668.5 billion.

From January to May this year, exports decreased by less than 1% year-on-year (-0.9%), but if semiconductors (which grew by 11.4% from January to May) are excluded, the drop widened significantly to 3.8%. The report identified the main causes as poor export performance in automobiles (-2.5%), automobile parts (-6.1%), and steel (-5.6%)?all of which are subject to U.S. tariff hikes?as well as a sharp decline in export prices for petroleum products (-21.5%) and petrochemicals (-10.6%) due to low oil prices. In particular, exports to the United States plummeted by 4.4%, and Korea's share of the U.S. import market dropped by 0.6 percentage points from 4% last year to 3.4% in the January?April period this year.

Containers piled up at Pyeongtaek Port, Gyeonggi-do, on the 1st. Photo by Yonhap News.

Looking ahead to the second half of the year, the expiration of mutual tariff suspensions and persistent uncertainties in the external trade and commerce environment are expected to make conditions even more challenging. The report added that the global economic recovery this year is likely to remain in the mid-2% range, and that global trade is highly likely to experience negative growth (-0.2%) within the year.

By product category, semiconductor exports?which were robust in the first half?are expected to decline by more than 5% in the second half. This is because, although demand for high-performance AI semiconductors will be sustained by the growth of the artificial intelligence industry, demand for general IT devices such as PCs and smartphones is expected to weaken, and memory prices, including DRAM, are projected to stagnate.

Automobile exports are also projected to decline by 7.1%, due to the prolonged electric vehicle chasm and the rising share of overseas production and procurement. Steel exports (-7.2%) are expected to face even greater difficulties as the U.S. raises import tariffs and trade remedy measures such as safeguards are strengthened, particularly in the EU and India.

In addition, among the 13 major export items, nine?including petroleum products (-19.2%), petrochemicals (-4.1%), and general machinery (-3.8%)?are expected to see export declines in the second half. However, display exports are forecast to grow by 6.5%, as the adoption of LTPO (low-temperature polycrystalline oxide) by domestic companies in all models of the iPhone 17 series is expected to partially revive the sector.

Hong Jisang, Director of Trend Analysis at the Korea International Trade Association, stated, "From the second half onward, we expect even tougher export conditions than in the first half, due to the expiration of the U.S. mutual tariff suspension, a slowdown in IT demand, a decline in exchange rates, and geopolitical risks." He emphasized, "Externally, we need to ensure that tariff negotiations with the United States are specified at a level no less favorable than those of competitor countries, and domestically, we must actively foster and support new growth industries such as AI, mobility services (MaaS), and biohealth to develop sustainable export growth engines."