South Korea expects a 7.9% jump in exports next year, predominantly due to a rebound in the semiconductor sector. This forecast from the Korea International Trade Association (KITA) marks a sharp turnaround from two years of trade downturn. KITA aligns these projections with global economic growth in the upper 2% range for 2024.
The financial landscape, including the won-dollar exchange rate and international oil prices, is expected to see notable changes. The won is projected to stabilize in the mid-1,200 won range against the dollar, while Brent crude oil prices might climb to $90 per barrel, a 4.65% rise from this year’s $86. These shifts are partly attributed to geopolitical tensions involving Israel and Hamas, and a resurgence in global travel demand.
South Korea’s current trade position reflects challenges, with an expected $15 billion deficit mainly due to reduced semiconductor exports. The largest impact stems from China, South Korea’s primary trading partner. This year’s exports are predicted to decrease by 7.8% to $630 billion, with imports also declining by 11.8% to $645 billion. The reduction in export volume largely results from a decreased demand for IT products as the world transitions back to offline activities post-COVID-19.
Despite these challenges, sectors like electronic components, EVs, batteries, and cathode materials have seen substantial growth. The trade dynamic between South Korea and China is evolving, with the gap in export volumes to China and the United States narrowing significantly.
Cho Sang-hyun, head of KITA’s Institute for International Trade, emphasized South Korea’s shifting export landscape. The country’s dependence on China is lessening, and the upcoming U.S. presidential election may further influence global trade policies, affecting South Korea’s market.
Looking ahead, KITA is optimistic about a trade revival from the fourth quarter onward, driven by a spike in demand for AI chips and other IT products. This resurgence, closely tied to the booming global AI industry, focuses on next-generation chips and solid-state drive (SSD) products. This anticipated upturn signals a promising phase for South Korea’s economy, showcasing its adaptability and resilience amidst global market fluctuations.
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