The Korea Federation of SMEs (KFS) forecasted on the 22nd that the export growth rate of the 12 major export sectors next year will be limited to 1.4 percent.
KFS noted that, based on a survey of the 12 major export sectors conducted among the top 1,000 corporations by sales, responding corporations expect exports to increase by 1.4 percent compared to the previous year.
By sector, bio-health (5.3%), general machinery (2.1%), petroleum and petrochemical products (1.8%), electrical and electronic (1.5%), and ships (1.3%) are expected to see export increases, while automobiles and parts (-1.4%) and steel (-0.3%) are anticipated to experience declines in exports.
Reasons cited for the export sluggishness include economic downturns in major target export countries (39.7%), increased tariff burdens due to enhanced protectionism (30.2%), and weakened price competitiveness due to rising raw material and oil prices (11.1%).
Among responding corporations, 32.6 percent expect export profitability to worsen compared to this year, which is higher than the 20.6 percent expecting improvements. The sectors with the highest projected declines in profitability were ships (50.0%), electrical and electronic (45.4%), and automobiles and parts (42.9%).
Factors contributing to the expected decline in export profitability include increased tariff burdens due to enhanced protectionism (46.9%), reductions in export unit prices due to intensified export competition (20.5%), rising raw material prices (12.2%), and increased import costs due to the depreciation of the Korean won (12.2%). To respond to sluggish exports, strategies are being considered, including diversification of export markets (47.6%), cost reductions in operating and labor expenses (23.8%), and enhanced management of exchange rate risks (15.9%).
Regions anticipated to face the most challenging export conditions next year include the United States (48.7%) and China (42.7%). KFS analyzed that concerns are growing due to the intensification of U.S.-China conflicts since the election of President Donald Trump and the increasing likelihood of tariffs being imposed.
Priorities for government policies to strengthen export competitiveness include stabilizing the foreign exchange market (31.5%), minimizing export losses due to enhanced protectionism (22.8%), providing tax support related to raw material imports (18.0%), and ensuring stable supply measures for raw materials (11.4%).
Lee Sang-ho, head of the Economic and Industrial Headquarters at KFS, said, "The government should focus on creating an environment to enhance export competitiveness such as stabilizing the foreign exchange market, and the National Assembly must refrain from regulatory legislation that undermines the vitality of corporations."