Korea expected to overtake Japan in total exports

gettyimagesbank

By Yoon Ja-young

Korea's gap with Japan in total exports narrowed to its smallest amount ever, triggering expectations that it will surpass the neighboring economic powerhouse soon.

According to the Ministry of Trade, Industry and Energy, Korea's total exports this year as of May were $16.2 billion less than that of Japan. The gap is narrower than seen in the same period last year, in which Korea fell short of Japan by $55.7 billion.

In terms of monthly exports this year, Korea overtook Japan in May, when it logged $61.6 billion in exports, surpassing Japan's $56.3 billion.

This rise by Korea is notable when considering Japan's status in the global market as an exporting powerhouse. In 1980, Korea's total exports were only 13.4 percent of Japan's $134 billion. The ratio, however, has been surging steadily, to 35.9 percent in 2000, 60.6 percent in 2010, and 85.2 percent last year. As of May this year, Korea's total exports are at a staggering 94.8 percent of Japan's total exports.

While the figure is fueling hopes that Korea may soon surpass Japan in total exports, it still falls far behind in overall industrial competitiveness. Korea has been recording an annual trade deficit against Japan since 1965 when the two countries normalized ties.

Korea recorded a $10.4 billion deficit in its total trade in the first half of this year, but its deficit against Japan was even bigger at $12.2 billion ― Korea is using dollars it has earned from other countries to make up for the deficit it has with Japan.

The trade deficit is continuing as Korea is still relying heavily on Japanese high-tech companies for materials, components and equipment.