Korea's exports are likely to take a hit as the U.S.' trade disputes with practically everyone else rock the liberal world order. Its trade surplus for the year is forecast to drop 22 percent compared to the previous year to a four-year low of US$21.2 billion.
The Korea International Trade Association said Wednesday that exports of five of the country's top 13 main products will drop by $32 billion. Ships will decline $23.2 billion or 55 percent, display panels $3.5 billion or 12.5 percent, mobile communications equipment $2.8 billion or 12.9 percent, home appliances $1.3 billion or 15.1 percent, and steel $1.2 billion or 3.7 percent.
Ship exports will be hit hardest as orders dried up worldwide over the last two years. Display and mobile devices are losing out to the Chinese competition, while washing machines and solar panels are declining due to U.S. protective duties, as is steel due to a new quota. Shipments of the remaining eight exports are expected to grow, but at a slower rate.
Semiconductors, which have led export growth thanks to an unprecedented boom, will rise 16.6 percent in the second half of the year compared to 42 percent in the first half and 57 percent last year. But their proportion in total exports will still increase from 17 percent to 21 percent because other goods are performing worse.
Cars are expected to continue their lackluster performance with a mere 0.3 percent growth to $41.8 billion. That means overall exports will increase 5.5 percent to $605 billion, compared to 15.8 percent last year. In the first six months, they grew 6.4 percent but that will slow down to 4.6 percent in the second half.
The country's trade surplus is forecast at $74 billion, having stood in the $90 billion range for the last three years.
Moon Byung-ki, a senior researcher at KITA, said, "Worsening competition with Chinese products, U.S. protectionist trade policies and growing overseas production are intensifying the slowdown in Korea's export growth. As imports increase due to rising global oil prices, Korea's trade balance is likely to worsen."