The Ministry of Trade, Industry and Energy announced on January 1 that Korea’s trade value in 2019 reached USD 1 trillion for the third year. Although the country’s annual exports marked a 10.3 percent drop to $542.4 billion and imports saw a 6.0 percent decrease to $503.2 billion, Korea achieved the overall trade value of 1 trillion dollars and remained as a net exporter for the 11th consecutive year with a trade surplus of $39.2 billion.
Despite a downturn in semiconductors, petrochemicals, and petroleum products industry and challenges in global trade such as the U.S.-China trade dispute, Japan’s restrictions on exports, Brexit, and Hong Kong protests, Korean trade surpassed the $1 trillion mark.
Korea is one of the 10 countries to achieve an annual export value of more than $ 1 trillion, and is one of the nine countries to achieve the feat for three successive years. Notwithstanding the annual drop in exports, the overall quantity of exports remained strong and the share of Korean products in major markets expanded, indicating export competitiveness.
In terms of volume, cumulative exports from January to December inched up 0.3 percent compared to the same period last year. 12 out of 20 major export items saw volume growth. They were semiconductors (up 7.9 percent), petrochemicals (up 2.0 percent), automobiles (up 5.1 percent), auto parts (up 1.1 percent), ships (up 18.0 percent), home appliances (up 1.5 percent), secondary batteries (up 3.0 percent), cosmetics (up 4.8 percent), agricultural products and fisheries (up 6.2 percent), plastics (up 1.5 percent), robots (up 6.0 percent), and fine chemical materials (up 0.9 percent).
After successful completion of restructuring, the automobiles industry saw growth in exports. Furthermore, new industries concerning electric and hydrogen vehicles, bio-health, and secondary batteries have risen as future export growth engines. Export for bio-health products increased for ten consecutive years to $8.8 billion and export for secondary batteries increased for four consecutive years to $7.4 billion, exceeding exports of existing major items such as home appliances and computers.
Moreover, the New Southern and Northern regions have emerged as prominent markets. The New Southern region saw its export share surpass 20 percent for the first time in 2019, and Vietnam has been the third largest export market since 2017 after the U.S. and China. The new Northern region marked the highest growth rate (up 23.3 percent) among all export markets in 2019.
Small and medium-sized enterprises continued to grow and their export share increased to 18.8%.
The automobiles grew 5.3 percent despite the decrease in global demand. Meanwhile, the items that saw decrease were semiconductors (down 25.9 percent), general machinery (down 1.8 percent), petrochemicals (down 14.8 percent), petroleum products (down 12.3 percent), steel (down 8.5 percent), displays (down 17.0 percent), ships (down 5.1 percent), auto parts (down 2.5 percent), wireless communication devices (down 17.6 percent), computers (down 20.6 percent), textiles (down 7.9 percent), and home appliances (down 3.6 percent).
By region, exports to the U.S. and the Commonwealth of Independent States (CIS) increased for three consecutive years, 0.9 percent and 24.1 percent respectively, while exports to the other destinations decreased.
Imports for the year declined 6.0 percent year-on-year to $503.2 billion as domestic production and facility investment dwindled. By use, imports of consumer goods rose 1.7 percent, but those of capital goods, commodities, and intermediary goods fell 15.4 percent, 10.1 percent, and 3.1 percent, respectively.
For December 2019, Korea’s exports saw a year-on-year decrease of 5.2 percent to USD 45.7 billion, marking a single-digit decrease for the first time in seven months after six months of double-digit drops. It is also the second smallest export reduction rate after 2.1% in April 2019. Imports dropped 0.7 percent to $43.7 billion and the trade balance showed a surplus of $2.0 billion, staying positive for 95 consecutive months.
Korean exports in December were affected by several factors: positive expectations of phase one trade agreement between the U.S. and China; a recovery of exports to China; and a major improvement in export reduction rate due to favorable sales in IT products (computers and home appliances) in the year-end shopping season.
It is forecast that exports will gradually boost up and return to positive growth in the first quarter of this year. The positive outlook is due to the U.S.-China trade small deal, the likelihood of recovery of the world economy hinted by the increase in Purchasing Management Index (PMI) in the U.S., China, and Germany, improvement in the semiconductor industry, and increase in export of ships, automobiles, and petroleum products.
By region, exports to the China, the CIS, and the Middle East increased and especially, exports to the CIS (up 19.8 percent) and the Middle East (18.3 percent) saw double-digit upturns.