KITA: "Exporters' Business Sentiment to Improve Significantly in Q1 Next Year"

EBSI Surpasses 110 for the First Time in Seven Quarters

Thanks to robust exports in key industries such as semiconductors and ships, domestic exporters are expected to see a marked improvement in business sentiment in the first quarter of next year. However, rising raw material prices and increased volatility in the won-dollar exchange rate are expected to remain major burdens for export companies, according to recent analysis.

The Korea International Trade Association (KITA) Institute for International Trade & Commerce announced on the 23rd that, based on a recent survey of approximately 2,000 companies across 15 items over the past two weeks, the Export Business Survey Index (EBSI) for the first quarter of next year was calculated at 115.8.

Cars awaiting shipment for export are lined up at the export yard of Pyeongtaek Port, Gyeonggi Province. Photo by Kang Jin-hyung

The EBSI is an index that surveys and analyzes the outlook of domestic exporters regarding export market conditions. A reading above the baseline of 100 indicates that more companies expect improvement compared to the previous quarter, while a reading below 100 suggests more companies anticipate deterioration. The EBSI for the first quarter of next year is projected to exceed 110 for the first time in seven quarters since the second quarter of last year, signaling a full-fledged recovery in export conditions. Among the 15 major export items, seven-including semiconductors and ships-are expected to see improved export conditions.

Semiconductors (187.6) showed the most optimistic outlook, driven by rising prices due to increased demand for high-bandwidth memory (HBM) and a shortage in the supply of general-purpose memory. Ships (147.2) are also expected to maintain strong export performance, reflecting continued delivery of high-value orders and expectations of increased orders for LNG carriers amid the expansion of liquefied natural gas production in the United States.

In contrast, exports of electrical and electronic products (70.4) and textiles and apparel (84.7) are expected to remain sluggish due to delayed recovery in global consumption, rising raw material prices, and intensified price competition-factors that reflect worsening external conditions.

Export companies identified key challenges for the first quarter of next year as ▲ rising raw material prices (17.5%) and ▲ increased volatility in the won exchange rate (15.4%). Notably, the proportion of respondents citing "increased volatility in the won exchange rate" as a concern rose by 5.5 percentage points from the previous quarter, marking the steepest increase among the 13 listed challenges.

Ok Woongki, Senior Researcher at KITA, stated, "While semiconductors and ships will lead export growth, there are differences across sectors, so caution is needed before taking an optimistic view of the overall economy. To address cost burdens and management uncertainties caused by a strong exchange rate, it is urgent to provide practical policy support, such as lowering trade finance interest rates, to help reduce costs."