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The Recent Upturn in Korea’s Exports: Background and Implications

Author Han, Jungmin Date 2021.06.16 Issue No 113
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○  Korea’s exports recorded a 23.4 percent increase over last year, up through May 2021.

 

 This upturn is considered to be the result of the recovery and rebound from the COVID-19-induced recession. Factors that have contributed to this upturn include the activity in the so-called “untact” (contact-free) economy, the reflexive benefits of heightened environmental concern, and the potential for realizing growth utilizing new economic growth engines.

 

○ Though the rebound effect from the global recovery following the COVID-19-induced recession is significant, the increase in Korea’s exports has outpaced even this rebound.

 

 With heightened activity in the untact economy, as consumers are increasingly eager to embrace contact-free activities in the wake of the COVID-19 pandemic, there has been a spike in exports of Korea’s most internationally competitive products such as semiconductors, displays, wireless communications devices, and other IT-related products.

 

 With heightened interest in climate change mitigation and environmental protection, international environmental regulations have grown more stringent. This has had the reflexive outcome of increasing demand for eco-friendly automobiles, LNG-fueled ships, and other high value-added products.

 

 Healthy performance in the areas of biohealth, rechargeable batteries, and other new export growth engines are contributing greatly to the positive trend in exports. Though exports are expected to remain steady this year, the second half of 2021 is expected to show a relative slowdown due to the base effect of the previous year and reduced demand for products that benefited from the untact economy.

 

 In order to sustain the positive trends in exports we must preemptively act in anticipation of changing global trade structures as the world shifts to a post-COVID environment.