Korea’s export competitiveness is losing steam amid a global trade slowdown over the past two years,according to the World Trade Organization (WTO).
With the rise of protectionism, the United States possibly targeting Korea as a currency manipulator and China’s growing retaliation against Korea over the U.S. anti-missile defense battery, Korea’s exports are expected to face a further uphill struggle this year.
Korea dropped two notches to 8th place in export volume last year, with outbound shipments falling almost 6 percent to $495.5 billion. Korea fell behind Hong Kong and France.
This was the second annual decrease in a row, following an 8 percent dip in 2015, according to the Ministry of Trade, Industry and Energy.
The last time Korea experienced a second consecutive drop in exports was in 1957-1958 when they fell 9.7 percent and 25.9 percent, respectively.
Global trade among 71 economies also fell for two consecutive years. In 2016, global trade volume was $29.7 trillion, down 2.7 percent, following an 11.8 percent drop in 2015, the WTO noted. The lowest recorded trade figure worldwide was in 2010 when it was $28.2 trillion. The world economy fell for three years in a row from 1981-1983 following the second oil crisis in the late 1970s. The global slowdown has weighed on Korea’s export ranking, which fell from 6th among 71 countries in 2015. In 2009, Korea ranked 8th.
Although there are signs of the global economy recovering led by the United States, Korean exports are likely to face a slowdown in the latter half of this year amid inflation and protectionism.
Korean goods are increasingly exposed to risks associated with China’s diplomatic row with Korea over the U.S. Terminal High Altitude Area Defense, as well as the possibility of the United States designating the country as a currency manipulator this April, in line with the U.S. policy for a weaker dollar to support its exports.
“There is a chance that Korean exports will slow down in the latter half of this year more than the first half due to the trend of protectionism and uncertainties over the value of the won against the U.S. dollar,” said LG Economic Research Institute researcher Kang Jung-gu.
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