Jan 22, 2021
South Korea: Overcoming the COVID-19 Economic Crisis Through Trade
Korea International Trade Association (KITA) has revealed some promising data from 2020 that may suggest that the the country is headed for a good economic year, despite the damages caused by COVID-19.
KITA found that the export of new growth items such as eco-friendly cars and bio-health products increased significantly during the COVID-19 outbreak, while maintaining the solid growth of semiconductors, South Korea’s flagship export item. In 2020, semiconductor exports for South Korea was estimated to be somewhere between $107.5 and $111 billion, which is a 10.2% increased from last year ($99.2 billion). This upward trend is expected to continue increasing in 2021.
South Korea also recorded good export performance compared to major countries, and exports rebounded after the second half of the year, leading the economic recovery in the third quarter.
Keep reading to see how South Korea has utilized trade as a solution and response to the COVID-19 economic crisis.
Exports drive Economic Recovery
In 2020, Korea’s exports decreased 6.4% from the previous year to $557.7 billion, and imports decreased 7.6% from the previous year to $465 billion.
Exports in the second quarter of this year decreased by 20.3% compared to the same period last year due to COVID-19. However, from the third quarter, it saw a significant increase, reversing the negative trend.
In the second half of 2020, as exports and income increased, profits skyrocketed from $2.2 billion to $16.3 billion. In the third quarter and fourth quarter, South Korea had a profit of $16.3 billion and $15.6 billion, respectively.
Global Exports
Despite the global commodity trade facing challenges due to COVID-19, South Korea experienced a less serious economic blow than other major countries like Germany, Japan and the United States.
Based on data results from January to August 2018, South Korea had the fourth best “resistance” to trade challenges imposed by COVID-19.
Hong Kong, China and Netherlands were some of the other leaders of export resilience to COVID-19 in 2020.
Promising Industries in South Korea
The eight new industries account for growth in South Korean exports. Among the most successful and profitable are next-generation semiconductors, the bio-health industry and eco-friendly vehicles.
Semiconductor memory entered the market after the COVID-19 outbreak, as data traffic has increased rapidly due to the increasing adoption of the “untact” lifestyle. Demand for servers also increased, and exports naturally shifted to increase as demand for mobile devices recovered after the second quarter of 2020.
Even before April, when the effects of COVID-19 began to take place seriously, semiconductor exports increased 3.1% from the year before.
Between January to October 2020, bio-health exports increased 45.7% year-on-year, with exports surpassing $10 billion for the first time ever. Exports of eco-friendly cars (23.7%) and next-generation semiconductors (12.1%) also increased significantly.
Expansion of Korea’s share in the Import Market
Despite the shrinking global demand due to COVID-19, the share of Korean products in the import markets of major countries appears to have risen overall compared to 2019.
Exports to the US increased by 12%,11% for Japan, and 0.5% for Taiwan. Although exports to Malaysia is small compared to other larger countries, the country saw the biggest increase in import share percentage of Korean products.
Conclusion
KITA showed us that Korea’s exports this year are better than those of other major countries despite the global economic crisis and the financial challenges that COVID-19 brought. In particular, exports rebounded after the second half of 2020, leading to definite economic recovery in the third quarter.
The main achievements of this year’s exports include exports of new growth items such as eco-friendly cars and bio-health innovations. With a significant increase, it has established itself as a major global exporter, and semiconductor exports have maintained a solid growth trend.
In line with Korean consumption patterns, exports of “untact” products, home economy, and medical and hygiene related items increased significantly. The trend will continue well into 2021 and the future, even post “COVID” era.
To know more about South Korea’s economic, market, and business trends, check out the AJ Marketing Blog.
Read Next:
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Korea’s E-Sports Industry in 2020
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