South Korea advances toward becoming fifth largest exporter, surpassing Japan

 

 

According to the World Trade Organization (WTO) on June 20, South Korea’s export value in the first quarter (January to March) of this year reached $163.7 billion, positioning it seventh globally, just after Italy, which recorded $168.3 billion and ranked sixth.

Since the Netherlands entered the top five in 2008, the leading export countries China, the U.S., Germany, the Netherlands, and Japan have seen little change in their rankings. Germany ceded its top exporter status to China in 2009 and was overtaken by the U.S. in 2010. Since 2019, the top five exporters have been China, the U.S., Germany, the Netherlands, and Japan, in that order. South Korea, which ranked 12th in 2008, climbed to 7th in 2010 and reached 6th place for the first time in 2015, maintaining a position between 6th and 8th recently. On the other hand, Japan has been in fifth place since 2019, having been overtaken by the Netherlands that year.

An official from the Ministry of Trade, Industry and Energy stated, “Japan’s export volume has exceeded $700 billion annually over the past three years, and Korea is targeting $700 billion this year, making entry into the top five a challenging goal. However, our main industries like automobiles, ships, and displays are performing well, especially semiconductors, which are showing a strong recovery, making it possible to aim for the top five.”

The gap in export values between Korea and Japan is continuously narrowing. Last year, Japan’s exports amounted to $717.3 billion, $85.1 billion more than Korea’s. However, this gap reduced to $4.8 billion in the first three months of this year and further to $2.3 billion in the five months up to May.

Exports significantly enhance a country’s stature and have a substantial impact on economic growth. Last year, exports fell by 7.5% from the previous year to $632.2 billion, the third-highest amount ever recorded. The Korea Trade Association recently published a report on ‘The Contribution of Exports to the National Economy,’ analyzing that exports greatly contributed to Korea’s economic growth.

According to the report, exports contributed 1.17 percentage points to last year’s real economic growth rate of 1.36%, accounting for 86.1% of the total economic growth. The proportion of exports to GDP also rose from 34.7% in 2020 to 35.7% last year, the highest level in the 2020s. The value-added from exports as a proportion of GDP increased to 26.7% last year, up 0.8 percentage points from the previous year.

The increase in exports is playing a significant role in boosting economic growth rates. In the first quarter of this year, the GDP growth rate was 1.3%, with net exports (exports minus imports) contributing 0.8% to this growth. Lee Chang-yong, Governor of the Bank of Korea, has adjusted this year’s growth forecast from 2.1% to 2.5%, stating, “Three-quarters of the upward revision in the growth forecast is due to the increase in net exports, with exports performing better and imports decreasing more than expected.”

Source:Businesskorea