The forecast has emerged that domestic export performance will slightly decline in the first quarter of next year due to the uncertainties in the trade environment, including the inauguration of Donald Trump's second term.
According to the report from the Korea International Trade Association (KITA) International Trade Research Institute published on the 22nd, the Export Business Survey Index (EBSI) for the first quarter of next year has fallen to 96.1, dropping below the baseline of 100 for the first time in four quarters. The EBSI is an indicator that surveys corporate expectations for export performance in the next quarter. The EBSI is aggregated on a scale of 0 to 200, meaning that a value above 100 indicates an improvement in the export market for the next quarter, while a value below 100 indicates a contraction.
The EBSI rebounded from 97.2 in the fourth quarter of last year to 116.0 in the first quarter of this year, but recorded 108.4 in the second quarter and 103.4 in the third quarter. Despite the downward trend, it has remained above the baseline, but it has now dropped below the baseline for the first quarter of next year.
By item, it is expected that 10 out of the 15 major categories will fall below the baseline in the first quarter of next year, indicating worsening export conditions. In particular, demand for home appliances (52.7) in major export destinations North America and the European Union (EU) is projected to shrink, leading to significant potential for negative export growth. The semiconductor industry (64.4), Korea's largest export item, is also forecasted to experience sluggish exports due to heightened competition from increased exports of commodity DRAM to China and rising inventories in front-end industries.
On the other hand, the export outlook is relatively bright for ships (146.4), daily necessities (137.9), automobiles and auto parts (130.7), chemical products (121.5), and plastic, rubber, and leather products (100.5).
Key export obstacles for the first quarter of next year include rising materials and supplies prices (17.4%), economic downturns in export destinations (15.2%), buyers' demands for price reductions (12.0%), and increased volatility in the exchange rate of the won and rising logistics costs (10.9%).
Researcher Heosulbi of the Korea International Trade Association analyzed, "It seems that major exporting corporations are concerned about the deterioration of the trade environment following the inauguration of Trump's second term." He added, "As global uncertainties increase, exporting corporations must closely monitor the trade policies of various countries and meticulously prepare for materials and supplies management."
This survey was conducted with participation from 1,010 out of more than 2,000 companies that had export performances exceeding $500,000 in the previous year.