Middle East bigger market than Japan for Korea

By Kang Hyun-kyung

Lee Kwon-hyung, economist

The market share of Korea’s eight Middle Eastern trading partners combined, including Saudi Arabia and Iran, last year was bigger than that of Japan.

An economist said the significance of the Middle East as a trading partner was relatively understated, despite the trade volume.

“Korea’s combined trade volume with eight Middle Eastern countries accounted for 5.9 percent of the total in 2014, slightly higher than that of Japan,” Lee Kwon-hyung, head of the Middle East and Africa Team at the Korea Institute for International Economic Policy (KIEP), said on May 21 during the Korea-Iran Forum at the Lotte Hotel. Japan is Korea’s third-largest export market and its share accounted for 5.6 percent last year.

Saudi Arabia is the largest Middle Eastern trading partner for Korea. Iran came in fourth, following the United Arab Emirates, and Turkey.

Lee predicted Korea’s bilateral trade volume with Iran will go up if the ongoing nuclear negotiations result in a final deal by June 30 and nuclear-related sanctions are lifted.

He said Iran has the potential to rise to the first or second largest Middle Eastern trading partner to Korea in the future, considering the past trade records with Korea and the large number of domestic consumers.

Korea’s trade volume with Iran peaked in 2011, marking $1.7426 billion. The Korean government joined the United States-led sanctions against Iran, imposed for the latter’s nuclear program, in 2010 and bilateral trade has since dropped sharply. The ongoing Iran nuclear negotiations raise the hope for Korean companies to resume business in Iran. If the deal is clinched, industry experts say the deal will pave the way for business opportunities.

Lee pinpointed that among others, Iran’s relatively high breakeven point for oil — $130 — could pose a risk to Korean companies.