Despite Korea experiencing a boom in exports in the semiconductor industry, overall export growth for Korean goods is expected to fall short of the overall growth rate of worldwide trade due to worsening international competitiveness, according to the Bank of Korea on Wednesday.
The central bank forecast Korea’s exports would see 3.7 percent growth this year compared to last year. However, the figure is 0.5 percentage point lower than the International Monetary Fund’s global trade growth projection of 4.2 percent.
Korea’s export market growth has fallen below the rise in global trade for four consecutive years.
In 2014, the country’s exports rose by 1.1 percent, while worldwide trade grew by 3.3 percent. Korea saw even less growth in 2015, with 0.6 percent compared to global trade’s 3.8 percent. Exports rebounded to 2.2 percent growth last year, but the figure fell short of world trade’s growth of 2.4 percent.
The BOK forecast next year’s export growth would reach 3.5 percent, which would still lag behind the IMF’s projected 4 percent gain in global trade. Therefore, Korea may experience five consecutive years of lagging exports.
According to local experts, the country’s slow export pace is due to worsening competitiveness in the international market.
“As high growth has reached its limit, it means that Korea’s exporting methods have been pushing (over the past several years) and have reached their limit,” said Lee Keun-tae, a researcher at the LG Economic Research Institute.
“Until the early 2000s, Korea’s export strategy of massive investments and mass production was successful. However, with the exception of semiconductors, the global demand for Korean products has not had a significant increase,” Lee added.
From 1980 to 2013, it was rare for Korea’s export growth to fall below the world trade growth rate. However, following the global financial crisis, Korea has been unable to keep pace with the rate of increase in the global trade market.