Gwangju Employers Federation: "High Exchange Rates Burden Regional Economy... Measures Needed"

The Gwangju Employers Federation has called for measures to address the burdens that high exchange rates are placing on the manufacturing sector, ordinary households, and small business owners.

On January 21, the Gwangju Employers Federation issued a press release stating, "In terms of the impact on manufacturing and export companies, manufacturers in the Gwangju and Jeonnam regions cited high exchange rates and exchange rate volatility as the main factors in this year's economic outlook," adding, "Rather than expanding investment, they are focusing on maintaining existing facilities and stable management."

The federation continued, "For mid-sized and small manufacturing companies with a significant export share, a rising exchange rate may temporarily improve export price competitiveness, but at the same time, the increased prices of imported raw materials and components put pressure on profitability." It further explained, "Regarding raw material, energy, and logistics costs, high exchange rates are leading to foreign exchange losses and decreased operating profits for companies that import raw and subsidiary materials such as steel and food. This is expected to increase cost burdens across the regional manufacturing sector."

It also noted, "Transportation and logistics costs linked to energy and oil prices are becoming more volatile alongside high exchange rates. This will increase cost burdens for manufacturing and distribution companies in regions with high logistics dependency, such as Gwangju and Jeonnam." The federation added, "In terms of prices, ordinary households, and self-employed businesses, the rise in the won-dollar exchange rate has been reflected in the prices of imported food ingredients and processed foods in the Gwangju area, leading to higher household and dining-out costs."

The Gwangju Employers Federation stated, "According to statistics, the price index for processed foods (such as coffee, tea, bread, grains, and snacks) is generally on the rise, raising concerns about a weakening sense of purchasing power and real purchasing power among low-income groups and small business owners." The federation warned, "In terms of the regional economy and employment structure, the Korean economy in 2026 is expected to see a deepening combination of high exchange rates, strong exports, and sluggish domestic demand. This is likely to negatively affect employment in the regional service sector and self-employed businesses, which have a high proportion of domestic demand."

Additionally, the federation pointed out, "From a regional perspective, there is a growing need to strengthen risk management capabilities for high exchange rates and volatility by utilizing foreign exchange insurance, diversifying import sources, and implementing inventory strategies." The federation emphasized, "Local governments and related organizations should simultaneously support the alleviation of raw material and energy burdens caused by high exchange rates, provide financial and marketing support for export companies, and implement measures to ease the burden of prices and living costs for vulnerable groups in order to mitigate the economic shock to the region."