Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
Korea emerges as No. 7 exporter
By Kang Seung-woo
By Kang Seung-woo
South Korea is on its way to becoming the world’s seventh-largest exporting country this year on the strength of growing demand for information technology (IT) products, trading organizations said Friday.
According to the World Trade Organization (WTO) and the Korea International Trade Association (KITA), Korea’s overall exports between January and August 2010 reached $299.1 billion, up 32.6 percent from the previous year, to sit at an all-time high at seventh behind France, whose exports chalked up $335.2 billion. Korea’s previous high in terms of total exports was ninth, last year.
In addition, Korea, Asia’s fourth-largest economy, tallied a single-month record of $44.1 billion in October to cement its current place in the hierarchy.
Italy’s exports increased 10.7 percent year-on-year to $283.6 billion to come in eighth, followed by Belgium, whose exports stood at $264.9 billion. Italy and Belgium were ranked seventh and eighth respectively a year ago.
Since late last year, the global economy has been recovering, and it has helped IT products see a greater demand.
Rising product prices have also contributed to the growth of total exports.
Korea’s exports are based on IT commodities, including semiconductors and liquid crystal displays (LCD), while Italy and Belgium have the edge in medical supplies, automobile parts and petrochemicals.
“Korea was expected to place eighth in 2010 after ousting Belgium in an early estimation, but it beat expectations and is even widening its gap further with Italy,” said an official of KITA.
“This year, Korea has a high possibility of becoming the seventh-largest exporter in the world.”
During the cited period, China, the world’s No. 1 exporting nation topped the list with $989.7 billion after beating the United States at $822.8 billion and Germany at $807.3 billion. Japan and the Netherlands rounded out the top five with $491.7 billion and $363.8 billion apiece.
Service account deficit snowballing
Despite its impressive numbers in exports, Korea is still struggling with its service account, as it is forecast to hit an all-time high this year.
According to the Bank of Korea (BOK), the accumulated deficit of the service account mounted to $15.45 billion through the third quarter.
The figure is up $4.03 billion, or 35.2 percent, from the previous year.
The account, the monthly average of which is a shortfall of $1.72 billion is on pace to surpass the $20 billion mark for the first time at $20.6 billion.
The service account is one of the main elements of the current account and it includes outlays by Koreans on overseas trips.
“The main culprits of the growing deficit of the service account are payments for patent rights and an increasing number of expenses spent on overseas studying and travel,” said an official of the BOK.
“The trade deficit in the service sector will deepen the nation’s dependence on overseas services and eventually, drag on the domestic service industry.”
The cumulative shortfall in payments for patent rights stood at $3.88 billion won as of September, while the travel account deficit surpassed $6 billion.