South Korea’s exports increased 29.6 percent on-year in July to $55.4 billion, the highest monthly figure since the country began compiling related data in 1956, according to data released Sunday by the Ministry of Trade, Industry and Energy.
In the first seven months of this year, outbound shipments from Asia’s fourth-largest economy reached $358.7 billion, also a record high for the January-July period.
The steep increase in exports is partly attributable to the low base effect from the severe impact of the coronavirus outbreak on global trade last year.
But a look into specific records shows the robustness of the country’s exports, which account for about half of its economy.
Korea’s exports grew more than 20 percent for a fourth consecutive month in July for the first time in a decade, with shipments to nine major overseas markets for its goods also having risen over the four months.
It is encouraging that exports by traditional and emerging sectors alike have grown at a record pace. In July, outbound shipments of chips and automobiles, which account for nearly 30 percent of the country’s exports, rose 39.6 percent and 12.3 percent, respectively, to $11 billion and $4.1 billion. Exports of rechargeable batteries and bio-health products increased 31.3 percent and 27.2 percent each to $790 million and $1.32 billion.
Trade Ministry officials expect the country’s exports to continue to grow in the latter half of the year, with the total annual outbound shipments projected to surpass the $600 billion mark.
The country’s manufacturing exporters should be praised for their ceaseless efforts to develop new products and diversify overseas markets despite a string of anti-corporate measures taken by President Moon Jae-in’s administration and ruling party lawmakers.
Announcing the latest export data, Trade Minister Moon Sung-wook vowed to spare no effort in providing support for exporting businesses. His pledge should not end with yet more lip service.
In addition to substantial and specific assistance, drastic deregulation is needed to let manufacturing exporters realize their potential to the maximum.
In recent years, a wide range of regulatory restrictions have been imposed on companies, holding them back from increasing investments and hiring more workers.
It is all the more necessary to step up efforts to improve business conditions as there are many downside risks to the economy down the road.
Steep hikes in the price of raw materials and transportation costs could be coupled with the reshaping of global supply chains to increase burdens on the country’s manufacturing exporters. Above all, the global resurgence in coronavirus cases, driven by the more contagious delta variant, might dampen the economic recovery across the world.
Local companies have already been concerned about the prospect of the economy fraught with risks.
According to the Bank of Korea, the business sentiment index based on a survey of major domestic firms took a downward turn in July for the first time in five months.
The country’s manufacturing activity also reached a seven-month low in July as new orders slowed down due to the resurgence of coronavirus infections and a subsequent supply-chain bottleneck.
The purchasing managers’ index of the local manufacturing industry came to 53 last month, down 0.9 point from the previous month, according to a separate survey by IHS Markit, a global market researcher. Korea’s manufacturing sector’s outlook for the next 12 months also touched a seven-month low in July.
With the tightening of social distancing rules, there is a sign of domestic consumption getting sluggish. The country’s consumer sentiment index fell sharply last month after continuing to rise for the preceding six months.
Korea’s economy grew 0.7 percent on-quarter in the April-June period following a 1.7 percent expansion in the first quarter. Citing the positive figures, the Bank of Korea last week said the country’s economy is on track for a 4 percent growth this year.
Last week, the International Monetary Fund also raised its 2021 growth outlook for Korea’s economy to 4.3 percent from its previous estimate of 3.6 percent made in April.
To turn such positive forecasts into reality, the government should focus on carrying out sweeping deregulation to help cushion the possible impact from negative factors on corporate activity and the economy as a whole.
By Korea Herald (email@example.com