Nation should prop up central axis for economic growth
Korea's exports fell for the second consecutive month in January amid warning signs of a global business slump. The International Monetary Fund lowered its global economic growth projection for 2019 recently from 3.7 percent to 3.5 percent. In addition, the World Trade Organization said shipments from the world's 10 largest exporting countries began a downward shift starting last December.
Particularly worrisome is the declining foreign trade of China, hit by a trade dispute with the United States, sluggish domestic consumption and the overall slowdown of demand in developed economies. According to the Bank of Korea, China's exports increased 4 percent in the fourth quarter of last year from a year earlier, a sharp fall from the 11.7 percent gain in the third quarter.
On a monthly basis, China suffered a 4.4 percent fall in its exports in December, while its imports also declined 7.6 percent. The shrinking foreign trade of China, the largest trading partner for Korea, could hit Asia's fourth-largest economy directly. Actually, Korea's exports to China recorded a drop for the third straight month in January.
No less worrisome is a slowdown in semiconductor exports, given the dominant share they take in the nation's shipments. Exports of computer chips in December dropped 8.3 percent from a year ago, marking a fall for the first time in 27 months. Experts express concern about a downward cycle for the semiconductor sector, which accounts for 21 percent of Korea's exports.
With the advent of the New Year, various think tanks are revising down their forecasts for exports and economic growth. A global economic slowdown, the U.S.-China trade war and sluggish semiconductor exports are unfavorable factors that will not disappear quickly. Exports have long propped up Korea's economic growth, which means economic players will have to go all-out to bolster foreign shipments.
In the short term, the Moon Jae-in administration should provide policy support to back up exporters. In the longer term, the government ought to try to rectify the nation's exports structure that relies too much on China and the semiconductor industry.
Korea's exports fell for the second consecutive month in January amid warning signs of a global business slump. The International Monetary Fund lowered its global economic growth projection for 2019 recently from 3.7 percent to 3.5 percent. In addition, the World Trade Organization said shipments from the world's 10 largest exporting countries began a downward shift starting last December.
Particularly worrisome is the declining foreign trade of China, hit by a trade dispute with the United States, sluggish domestic consumption and the overall slowdown of demand in developed economies. According to the Bank of Korea, China's exports increased 4 percent in the fourth quarter of last year from a year earlier, a sharp fall from the 11.7 percent gain in the third quarter.
On a monthly basis, China suffered a 4.4 percent fall in its exports in December, while its imports also declined 7.6 percent. The shrinking foreign trade of China, the largest trading partner for Korea, could hit Asia's fourth-largest economy directly. Actually, Korea's exports to China recorded a drop for the third straight month in January.
No less worrisome is a slowdown in semiconductor exports, given the dominant share they take in the nation's shipments. Exports of computer chips in December dropped 8.3 percent from a year ago, marking a fall for the first time in 27 months. Experts express concern about a downward cycle for the semiconductor sector, which accounts for 21 percent of Korea's exports.
With the advent of the New Year, various think tanks are revising down their forecasts for exports and economic growth. A global economic slowdown, the U.S.-China trade war and sluggish semiconductor exports are unfavorable factors that will not disappear quickly. Exports have long propped up Korea's economic growth, which means economic players will have to go all-out to bolster foreign shipments.
In the short term, the Moon Jae-in administration should provide policy support to back up exporters. In the longer term, the government ought to try to rectify the nation's exports structure that relies too much on China and the semiconductor industry.
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