KITA paints bleak outlook for Korea Inc.Madeinkoreablog
Korea will face many obstacles in jumpstarting its sagging economy next year as exports, its main growth engine, remain in the doldrums amid continued sluggish global demand and increasing protectionism, the head of the export promotion body warned Monday.
Korea International Trade Association (KITA) Chairman Kim In-ho said Asia’s fourth-largest economy will face increasing uncertainties, propelled by growing protectionism, U.S. rate hikes, China’s industrial restructuring and Britain’s exit from the European Union.
“It will take some time for the world economy to rebound,” Kim said during a press conference at the KITA building in southern Seoul. “Korea is not in a position to influence global market conditions. We have to maneuver within the given frame. The nation should follow market trends and make efforts to maintain strong partnerships with the United States and other major trade partners.”
The chairman stressed domestic companies should diversify their export markets and ship more premium, high value-added consumer products.
“Korea should cut its dependence on China, while establishing a larger presence in Vietnam and other rapidly emerging economies,” Kim said. “We should also export more premium consumer products, and nurture small and mid-sized companies into becoming globally competitive exporters.”
Despite largely unfavorable market conditions, Korea’s outbound shipments will increase by 3.9 percent to $516.5 billion in 2017 from this year, on the back of increasing demand from emerging economies and rising oil prices, according to the Institute for International Trade, affiliated with KITA.
Imports are also projected to jump 7.3 percent to $433.5 billion next year as companies pay more for crude oil and other raw material prices.
“Many developing economies will grow at a faster rate next year, buying more made-in-Korea goods,” Kim said. “In addition, rising oil prices will increase the prices of industrial products, meaning that local exporters will earn more per unit. Petrochemical, refining and display companies are projected to post a stronger rebound in their outbound shipments.”
But KITA estimated that this year’s exports would drop 5.6 percent to $497 billion from a year earlier, with imports falling 7.4 percent to $404 billion. As a result, its trade volume will decline to $901 billion from last year’s $963.3 billion.