Korea pins hope on exports in post-COVID-19 era

Exports could be a breakthrough for the South Korean economy in the post-coronavirus era, a state-run trade agency said Monday.

Despite numerous uncertainties that are expected to linger in 2021, the state-run Korea Trade-Investment Promotion Agency raised its exports forecast for next year, saying semiconductors and biotech products, among others, are likely to lead the gains.

Overseas shipments would grow 6-7 percent in 2021 to reach $540 billion-560 billion next year, from around $510 billion this year, the KOTRA projection shows.

The forecast was based on estimates and information gathered and analyzed by 127 overseas KOTRA offices in 84 countries.

As key favorable factors, the agency cited improving global trade conditions, increases in the prices of key export items like semiconductors and crude oil, growth in new export products and the expected implementation of the Regional Comprehensive Economic Partnership.

By product, Korea’s flagship export items such as semiconductors as well as items from noncontact businesses would continue to lead the overall export growth, the report said.

Another “semiconductor supercycle” is likely to occur driven by demand recovery, price increases, expansion of 5G networks and accelerating digital transformation, the agency projected.

Health care products would see their shares grow as a new growth export category as countries begin to establish infrastructure for public health amid the protracted pandemic.

Korea is also likely to witness a sales boom in electronics and other information technology products as the noncontact industry would thrive in the wake of the pandemic.

Compared to 2019, Korea’s exports that largely shore up Asia’s fourth-largest economy are forecast to shrink by around 6 percent by the end of this year. 

From Dec. 1 to 20, the value of exports inched up 1.2 percent year-on-year to $30.8 billion, according to data released by Korea Customs Service on Monday.

The figure suggests that the total December exports would not show a significant recovery from the pandemic impact.

From March to August, the country’s monthly exports kept declining on a year-on-year basis.

The declines are largely due to the decreased working days throughout the year.

In December alone, the working days were 0.5 day less than last year, the data showed.

In September, exports rebounded 7.6 percent due to more working days than in August, but the growth of exports in August was reduced to 3.6 percent due to the Chuseok holidays.

Although overall exports suffered declines this year, the biotech sector enjoyed an unprecedented boom in exports.

According to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, nine companies clinched a total of 14 biotech exports including pipeline drugs this year, reaching 10.1 trillion won ($9.17 billion) in value. The figure is 19 percent up from 2019.

Exports of ordinary medicine products also registered a new record of $5.89 billion as of November, the customs data showed.

“Based on experiences accumulated this year amid the pandemic crisis, exporters would see new opportunities next year, bringing the exports to a new level,” said KOTRA CEO Kwon Pyung-oh.

By Song Su-hyun (song@heraldcorp.com)