The government has announced that Korea’s trade volume will pass the $1 trillion milestone for a second consecutive year in 2012, overtaking Italy to become the world’s eighth largest trading nation.
According to the Ministry of Knowledge Economy, the nation’s trade volume totaled $888.5 billion during the first 10 months of the year, with exports accounting for $455.4 billion and imports $433.1 billion. The ministry forecast the trade tally would hit $1 trillion in the middle of next month.
One may take for granted the nation’s achievement of the $1 trillion milestone for two years in a row. Yet at the beginning of this year, many betted that Korea would not be able to hit the landmark figure for two straight years due to an unfavorable external environment.
Throughout the year, the financial crisis in the eurozone weighed down the global economy. It also dragged down China’s economy, the largest market for Korean exporters. Furthermore, the Korean currency strengthened due to massive money printing by central banks in advanced countries.
Due to these factors, Korea’s exports decreased 1.3 percent in the January-October period. But other countries fared worse than Korea. For instance, exports dropped 5.1 percent in Germany, 5.3 percent in France and 3.9 percent in Taiwan.
This means Korean exporters coped better with external challenges than their foreign rivals. In this regard, they fully deserve praise. Thanks to their undaunted efforts, Korea’s ranking among the world’s major trading nations has gone up a notch.
Over the past decade, Korea’s ranking has steadily improved, rising from 13th in 2000 to 12th in 2003, 11th in 2007, 10th in 2009 and to ninth in 2010. Now Korea trails only the United States, China, Germany, Japan, France, the Netherlands and the United Kingdom.
But the nation should not be complacent. Next year, the international trading environment is likely to remain as tough as this year. The eurozone uncertainty will likely continue to act as a drag on global economic growth, while China’s growth is forecast to slow as it is shifting its economic model.
Korean exporters will also have to brace for a stronger Korean won as advanced countries are likely to maintain their ultra-loose monetary policy. The Seoul government is also expected to let the currency appreciate as part of its efforts to boost domestic demand.
For exporters, the primary challenge is no doubt to overcome the increasingly tough external environment. Yet at the same time, they are required to make a conscious effort to bolster the relationship between export growth and job creation.
To contribute to job creation, exporters need to reduce their heavy reliance on foreign parts and components for the production of their finished goods. The government should also provide support for exporters to gradually change this structure.
Exporters also need to diversify the goods they sell on the global market. Currently, they rely too heavily on several key items, including petroleum products, semiconductors, autos and electronics. More efforts should be made to develop new growth engines in such promising fields as health care, nanoconvergence and green energy.
