Korean companies’ exports, which have been sluggish for the past two quarters, are likely to pick up in the three months from April, a think tank affiliated with the Korea International Trade Association said Wednesday.
The KITA Institute for International Trade projected that exports would not deteriorate as recent indicators of U.S. consumer sentiment were better than expected and the eurozone agreed on a second bailout package for Greece.
“The economic conditions perceived by Korean companies are unlikely to deteriorate further as recent indicators of U.S. consumption and investment are showing signs of recovery,” said Kim Yeo-jin, senior researcher at the think tank.
“But it is still too early to say the global economy has entered a recovery phase, and unfavorable conditions for exports such as high oil prices will continue in the second quarter.”
The institute’s Export Business Survey Index for the second quarter gained 5.9 points from the first three months of this year to 94.9 points, rising above the “poor” rating of 90 points or fewer.
The bleaker the outlook, the closer the EBSI, which ranges from zero to 200, gets to a zero. An EBSI of 100 means there is a balance of optimistic and pessimistic forecasts.
Exports of most items such as semiconductors, steel and autos are expected to show little change in the second quarter, but the number of items with an EBSI of under 100 dropped in the survey of KITA member firms with more than $500,000 in exports last year.
Exports of mobile phones, mobile phone parts and computers are projected to see an upturn for the first time in four quarters.
The outlook for petrochemicals was the poorest with an EBSI of 50 as high oil prices eroded export profitability.
In the KITA survey, 23.2 percent of the companies picked the rise of raw material prices as the biggest barrier to exports. Oil prices have continued to climb on geopolitical concerns over crude supply amid U.S.-led sanctions to cut crude oil imports from Iran, weighing on the exporters, the institute said.
Nineteen percent said greater volatility of the Korean won’s exchange rate was the largest stumbling block.
Stagnant economies in export destinations (18.6 percent), which had been selected as the biggest obstacle to exports in the first quarter, was seen as less of a problem for the coming three months due to improved U.S. economic indicators and reduced fears over the eurozone debt crisis.
Kim advised Korean companies to keep monitoring the factors that can adversely affect exports and find ways to raise profitability by making use of the free trade agreement with the United States.
By Kim So-hyun (
sophie@heraldcorp.com)
