Exports to rebound in 2020 on higher chip sales

Korea International Trade Association (KITA) Chairman Kim Young-ju speaks during a press conference at the association's headquarters in Seoul, Thursday. / Courtesy of KITA

By Kwak Yeon-soo

Outbound shipments will grow in 2020 mainly on the back of stronger memory chip sales, according to the head of the country's export promotion body, Thursday.

Korea International Trade Association (KITA) Chairman Kim Young-ju said that despite some downside risks, the association estimated that the value of exports next year would increase 3.3 percent from this year to $561 billion.

The figure is a positive sign given that exports for this year are expected to fall 10.2 percent from 2018 to $543 billion, due to sharp price drops in chips and petrochemical products.

“Korea, an export-oriented country heavily dependent on semiconductors and petrochemicals, was hit hard by price drops in chips and petrochemicals this year,” Kim said during a press conference held at KITA headquarters in Seoul.

“However, exports of semiconductors will grow in 2020 on stronger demand from data centers and 5G networks providers.”

According to KITA, exports of cars will also jump on the back of increasing demand for electric vehicles. On the other hand, exports of displays and mobile phones are likely to fall due to declining demand and intensifying competition from China.

Imports are anticipated to grow 3.2 percent to $522 billion, which will enable Asia's fourth-largest economy to exceed $1 trillion in trade volume for the fourth consecutive year.

Kim stressed that companies should diversify their trade portfolio to boost exports and reduce overdependence on China.

“The U.S.-China trade war will likely continue next year, and more countries have been adopting protectionist policies despite our efforts to clinch new FTAs with emerging countries,” he said.

“Therefore, Korean companies need to seek new growth engines, such as electric vehicles and rechargeable batteries, to buttress their overseas businesses.”

As part of the solutions, Kim called on Korean companies to invest more in the services sector, such as healthcare, tourism, logistics, software and content creation, to foster their global competitiveness.

He also raised hopes of boosted ties with the member states of ASEAN and the CIS, as these regions offer favorable investment opportunities for Korean companies.

KITA promised to connect private companies and innovative startups in their efforts to thrive in the new trade order.

“We will fully support companies to enhance their competitiveness and structural improvements for exporting,” he said.