Is the slowdown in exports a structural phenomenon?
|Author||Kang Duyong, Jung Inhwan||Date||2015.05.19||Issue No||613|
After the global financial crisis, exports growth has dropped significantly
● An average growth of annual exports, on a customs clearance basis, fell sharply from 11.9% (2000 ~ 2008) to 1.0% (2011 ~ 2014).
● In terms of exports growth of the recent three years, both nominal exports on customs clearance basis and real exports on national accounts basis were the lowest since 1970
● Real exports on the national accounts basis were more sluggish this year, recording 0% in the first quarter of 2015
Exports on the customs clearance basis decreased by 4.3% from Jan. to Apr. in 2015 as the decline in unit prices was added to the situation
Such a slowdown in exports are estimated to be a structural phenomenon that reflects much of the changes in economic structures in and out of the country
● Comparing with the past trend, only one-third of the real export slowdown after the global financial crisis can be explained by short-term factors such as the sluggish world trade and fluctuations of exchange rates
● As a result of estimating the long-term model for Korea’s exports, long-term elasticity on world income has fallen by 20-25% since the global financial crisis
● This shows that exports growth would continue to be low for a long period of time
Structural factors of stagnant exports can be structural change in global trade, the economic slowdown and structural change of China, accelerated overseas production by leading exports-oriented industries, and the matured domestic economy.
Along with clear understanding on the causes of stagnant exports, it is required to make strategic efforts to boost exports based on this understanding, and strive for stimulating domestic demands that make up for weak exports.