South Korea is within reach of becoming the fifth-largest exporting nation in the world, fueled by a steady rise in outbound shipments, a private economic think tank said Sunday.
The Hyundai Research Institute said in its latest 2018 export issue review paper that as of September last year, Asia's fourth-largest economy ranked No. 6 among exporters, up from eighth place in 2016. In 2017 its products accounted for 3.6 percent of all exports, a record high for the country.
It said the Netherlands, that has held the No. 5 spot since 2008, accounted for 4 percent of the global export market last year, down from 4.4 percent 10 years earlier.
The HRI said that for the new year shipments to developing economies are expected to grow sharply, bolstered by solid growth.
Containers ready for shipment at Busan port. (Yonhap)
According to the International Monetary Fund economic growth among advanced industrialized economies will move up 2 percent this year, down 0.2 percentage point from 2017, but numbers for developing countries will rise 0.3 percentage point to 4.9 percent.
Such a trend can benefit South Korea that has increased trade with developing economies as part of its export diversification effort.
On the negative side, the think tank said that export growth will generally slow down compared to last year, with various risks linked to trading with the United States and China.
In addition, South Korea could experience problems with the appreciation of its currency compared to major currencies like the Japanese yen.
A stronger won can reduce the price competitiveness of the locally made products abroad, particularly if the yen loses its value.
The rise of crude oil poses can further complicate growth with rising prices to boost export volume, but posing its own set of problems down the line. South Korea has extensive oil refinery and petrochemical facilities.
If Western Texas Intermediate rises to US$60 per barrel in the fourth quarter, exports will go up 0.19 percent, but steady rise in prices could cause a drop in demand.
In regards to semiconductors that has contributed greatly to the country's recent export growth, HRI said shipments will continue to do well in the first half, with expansion tapering towards the latter months of the year.
The think tank said that beside's South Korea's traditional industries, eight new business areas such as next generation semiconductors and displays, energy, biotech and robotics promises good growth potential going forward.
Total exports in these sectors rose 27.5 percent on-year in 2017 to $73.6 billion. The growth rate for this field easily exceeded 15.8 percent gains for all exports.
HRI said that for South Korea to climb higher on the ladder of exporting nations it has to diversify its export market, enhance competitiveness of products and build up new industries that can sustain the current expansion. (Yonhap)