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Weak chip demand pushes economy recovery off track
Export-reliant economy struggles to shake off COVID-led downfall as sales of key export item dwindlesBy Park Han-na
Published : March 2, 2023 - 17:29
Sluggish demand for chips, the country’s key export item, continues to hinder Korea from getting the economy on a recovery track, the finance minister said Thursday,
Asia’s fourth-largest economy logged a fall in exports for a fifth month in a row in February due to weak global demand for semiconductors amid an economic slowdown.
“Without a rebound in the semiconductor industry, limits on export recovery are inevitable for the time being,” Finance Minister Choo Kyung-ho said during a meeting with economy-related ministers.
Outbound shipments fell 7.5 percent on-year to $50.1 billion last month, according to the data compiled by the Ministry of Trade, Industry and Energy on Wednesday.
The overall decrease came as exports of chips plunged 42.5 percent. Semiconductor exports in February amounted to $5.963 billion, which accounted for 11.9 percent of total exports, a sharp decline from 23.8 percent in the same month a year ago.
Exports to China also decreased by 24.2 percent last month from a year earlier as the semiconductor industry was shaken. China is Korea's major trading partner and the largest export market for chips. China's share of Korean semiconductor exports reached 40.3 percent in 2022.
"Despite the sluggish semiconductor industry, the average daily exports in February improved slightly compared to January due to the favorable sales of automobiles and secondary batteries," he said.
The government aims to secure next-generation technology in key industries such as chips, secondary batteries and electric vehicles and to strengthen competitiveness by fostering human resource. In addition, it plans to provide customized support for market development for 12 new export industries, including nuclear power, defense, biotechnology and content.
"With some good news from the defense industry, such as the signing of a homegrown FA-50 light attack aircraft export contract with Malaysia last week following Poland last year, promising new export sectors such as biotechnology, content and agricultural products are also showing new potential,” Choo said.
On the same day, Deputy Prime Minister Choo also announced measures for the exports strategy of Korean content. Some 10 centers for overseas business tied to content made by the country will be established in five cities, including New York and London, by the second half of this year, with plans to expand the total number to 50 by 2027.
“The content industry is a key industry that drives the growth of not only related service industries such as media and tourism, but also manufacturing industries such as food and IT devices.” plan,” he said.
The government also decided to support policy finance of 1 trillion won ($760 million), such as via the Korean content export special fund, and to establish a strategic alliance plan with global online video services by the first half of the year.
The country will continue to map up measures to achieve its vision to double the country's annual exports of cultural content to reach $25 billion by 2027, compared to $12.4 billion estimated in 2021, Choo added.
Promotion of tourism to Korea will also be carried out. "We will set this year and next year as the 'Visit Korea Year' and focus on holding tourism events in connection with Hallyu concerts,” he said.
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