‘US rate hike will burden Korean exporters’Madeinkoreablog
The US interest rate hike will likely pose more burden on Korea’s export-based economy as it will affect the emerging markets which Korea heavily depends on, a report said Thursday.
According to a report by the Korea International Trade Association, the strengthening dollar may lower material costs and cause capital outflow, triggering an impact on emerging markets such as China, Central and South America, which could affect the Korean economy.
From January to October this year, emerging countries made up 57.1 percent of Korea’s exports, according to KITA.
“If the strengthening dollar causes capital outflow in the emerging countries, the instability of the global financial market will be worse, shrinking real investment and consumption, and delaying the global economic recovery,” the organization said.
“It is important to thoroughly monitor the possible negative impact (of the US interest rate hike) on emerging markets as developing countries make up much of the Korea’s exports.”
The report added that Korea’s recovering industries may especially be affected, such as the petrochemical, automobile, machinery and steelmaking industries.
According to the KITA’s survey conducted on about 600 companies in September, 34.2 percent expressed concerns over the negative impact of the US interest rate hike while about 25 percent were optimistic.
Companies were most concerned about exports to Central and South America, with 60 percent of them saying so. This was followed by exports to the Middle East and Southeast Asia, at 44.7 percent and 40 percent, respectively. Around 28 percent of the companies expressed concerns about exports to the US.