Last month, Korea’s exports dropped 15 percent year-on-year, the largest monthly drop since the financial crisis in 2009. While the domestic market is recovering from the aftermath of the MERS scare, Korea exports continued to fall for eight straight months. This makes it not so easy for Corporate Korea to reach its economic growth of 2 percent or higher in 2015. And a worse crisis is facing Korean manufacturers sandwiched by low domestic demand and a slump in exports. According to the Ministry of Industry, Trade and Resources, Korea’s exports in Aug. stood at US$39.33 billion, a year-on-year drop of 14.7 percent. The drop is the largest monthly drop in six years, since Korea recorded a year-on-year drop of 20.9 percent in exports in Aug. 2009, shortly after the global financial crisis.
Since the beginning of this year, Korea’s exports had slid 0.9 percent in Jan., 3.3 percent in Feb., 4.3 percent in March, 8.0 percent in April, and 10.9 percent, the first double digit figure, in May. Since June, they had fallen less sharply by sliding 1.8 percent in June and 3.3 percent in July. But in Aug., they dropped more sharply. By products, exports of oil and petrochemical products dropped 40.3 and 25.7 percent, respectively, as oil prices grew a little and then returned to a decrease.
Also in the shipbuilding industry, the postponement of orders amounting to US$1.1 billion gave rise to a drop of 51.5 percent in exports. In addition, most of Korea’s major export items such as automobiles (9.1 percent), general machinery (15.5 percent), household appliances (8.7 percent), flat panel displays (6.8 percent), auto parts (15.9 percent), textiles (21.4 percent), and steel products (17.4 percent) inked drops in exports. By region, drops in Korea’s exports to China (-8.8 percent) and Japan (-24.4 percent) expanded. The catastrophic explosion at Tianjin Port and a drop in China’s demand for import products contributed to a decrease in Korea’s exports to China.
A greater problem is that such sluggish exports will not rebound in a short period. This is because Corporate Korea is surrounded by such strong negative factors as foreign exchange rates with a weakened Japanese yen and devaluation of the Chinese yuan, and seems unable to escape them. According to economic experts, Korean companies are not sure that they can survive amid hot competition among Korea, China, Japan and the U.S. China can maintain its economic growth rate if and when it continues to increase its shares in markets where Korea is the leader, such as the electronics and display markets. Japan is in hot pursuit after the long tunnel of its economic slump. The American manufacturing industry is reviving after the U.S. overcame its financial crisis. However, it is said that six out of ten Korean companies listed on the KRX are barely making ends meet.