S. Korea’s Exports Declined for Second Consecutive Year for the first time in 58 years

The Ministry of Trade, Industry & Energy announced on January 1 that South Korea’s annual exports and imports are estimated to have reached US$495.5 billion (down 5.9% from a year ago) and US$405.7 billion (down 7.1%) in 2016, respectively. It added that the annual trade surplus is estimated to have slightly decreased from US$90.3 billion as in the case of the total trade volume, which had reached US$902.5 billion in 2015.

Last year, South Korea’s annual exports dipped below US$500 billion for the first time since 2010. In addition, its annual exports declined for two years in a row for the first time in 58 years.

In 2016, South Korea’s exports to China, which account for 25% of the total, fell 9.2% while those to the United States and the ASEAN region decreased 4.8% and 0.4%, respectively. Likewise, those to Japan, India, the Middle East and Latin America fell 4.8%, 3.6%, 13.8% and 17.1%.

South Korea’s semiconductor exports showed a negative growth of 1.3% while the rate of decrease amounted to 9.1% in the case of wireless communication equipment, 4.3% for petrochemical products, 17.5% for petroleum-based products, 12.5% for automobiles, 15.6% for flat display panels, 14.4% for ships, 11.7% for consumer electronics, 5.5% for steel and 4.6% for textile.

Fortunately though, the quarterly exports increased 1.9% in the fourth quarter of last year to show a positive growth for the first time in two years or so. Its exports increased 2.5% month on month in November and 6.4% in the following month. The country’s export growth rate had reached 2.1% in 2013 and 2.3% in 2014 but plummeted to negative 8% in 2015. In the meantime, export unit prices have risen since October last year, led by items such as semiconductor, flat panel display and steel. The decline in imports was led by raw material imports, which take up more than half of the total and decreased by 13% amid falling oil prices, although consumer goods imports increased.

According to the Korean trade ministry, South Korea’s exports are estimated to increase 2.9% to US$510 billion this year based on the recovery of the U.S. and emerging economies, an increase in oil prices, and recovery of demands. The other positive factors include the IMF’s forecast that the global economic and trade growth rates are likely to go up from 3.1% to 3.4% and from 2.3% to 3.8% between last year and this year, respectively.

The ministry also said that South Korea’s imports would increase 7.2% and its trade surplus would reach US$75 billion in 2017.