Korea's declining service exports run counter to global trends
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Korea's service exports displayed months of declines over the past year, going against the global pattern of a rapid post-pandemic recovery in tourism, transport, content, information technology and healthcare sectors .
Experts say sustained decreases over the four consecutive quarters undermined the robust exports of semiconductors the country's growth driver accounting for about a fifth of its outbound shipments.
No immediate turnaround is expected from the service industry, since the National Assembly remains uable to pass bills strengthening key service sectors due to conflicting interests among the stakeholders involved.
Also lacking are follow-up measures to advance President Yoon Suk Yeol's previous commitment to make Korea become the world's 10th-largest service export country by 2027. Korea remained the 15th-largest service exporter and the world's sixth-largest goods exporter as of last year .
OECD
Data from the Organization for Economic Cooperation and Development (OECD) showed Korea’s service exports in the third quarter of last year stood at $30.11 billion (40 trillion won), down 7.6 percent from the same period a year before.
This was the second-steepest decline after Denmark whose figure dropped 20 percent in the same period.
Korea’s service exports registered a decline of 5.8 percent in the fourth quarter of 2022 and continue to fall every quarter for the the following year.
The consecutive decline is the longest among the 39 OECD member countries, experienced by Korea and Israel only.
The OECD average showed an increase of 4 percent in the fourth quarter of 2022. The figure climbed further by 7.4 percent and 8 percent the following quarters.
The OECD average registered an increase of 9.7 percent in the third quarter of last year, while Korea’s figure slipped 7.6 percent.
Korea was among the only six economies with dwindling service exports in the third quarter despite global trade volume inching up last year.
Advanced economies rely significantly on services for GDP growth, unlike Korea.
World Bank data showed the service industry accounted for 77.6 percent of the U.S.’ GDP in 2021. The figure was 69.5 percent for Japan, followed by Germany at 62.9 percent. The OECD average was 71 percent. The figure for Korea stood at 57 percent.
Manufacturing accounts for 25 percent of Korea’s GDP, higher than Germany's 19 percent and Japan's 20 percent.
Korea’s service exports topped $103 billion in 2018, but plunged to $89.6 billion in 2020. The figure recovered to $119.9 billion in 2021 and stood at $130.2 billion in 2022.
Services accounted for 15.8 percent of Korea's exports as of the third quarter of last year, about half of G7 average of 29.9 percent. The G7 members are Canada, France, Germany, Italy, Japan, the U.K. and the U.S.