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South Korea’s trade promotion agency predicted that the country’s exports will be worth US$540-550 billion next year, up 6-7% from this year.

In a report titled “Export Forecast for 2021,” released on Dec. 21, the Korea Trade-Investment Promotion Agency (KOTRA) estimated that South Korea’s exports in 2020 would amount to US$510 billion, down 6% from 2019. This projection is a little higher than the one offered previously by the Korea International Trade Association (KITA): US$507.7 billion, down 6.4% year on year.

KOTRA’s prediction that Korea’s exports next year will reach US$540-550 billion is based on the opinions of 789 sources, including buyers and traders, reached through the agency’s global branches. Once again, KOTRA’s projection is a bit higher than KITA’s (US$538.2 billion, up 6.0% year on year).

Agencies inside and outside of Korea project that Korea’s exports next year will increase by 4-8%. The Organization for Economic Cooperation and Development (OECD) projects 4%; the National Assembly Budget Office, 4.8%; the government, 8.6%; the LG Economic Research Institute, 5.3%; the Korea Development Institute, 7.1%; and KITA, 6%.

The World Trade Organization predicts that global trade in goods in 2020 will fall by 9.2% year on year and then rebound 7.2% year on year in 2021.

Factors that KOTRA mentioned in its projection of expanding exports next year include an improving global trade environment, a recovery in the prices of leading Korean exports such as semiconductors and petrochemical products, consistent strength in new growth areas, the potential benefits of free trade agreements like the Regional Comprehensive Economic Partnership (RCEP), and the growth of online exports.

Negative factors identified by KOTRA include the possibility of another wave of the pandemic, the spread of protectionism, and growing uncertainty in the global trade environment.

Regions where KOTRA expects Korea’s overall exports to increase next year are China, the US, India, and the Association of Southeast Asian Nations (ASEAN). Demand for imports is expected to increase in these regions because of large-scale economic stimulus measures, improving economic conditions, and eco-friendly policies (in Europe and the US).

KOTRA predicted that exports to Japan and the Middle East will remain at this year’s level. Japan faces a protracted economic recession and a delayed recovery in consumption, while the Middle East faces a delayed recovery in oil prices and concerns about a reduction in international construction projects, the agency said.

More specifically, Korean exports are expected to be driven by leading products and by products related to new growth areas and virtual activities. “A recovery in demand, rising prices, the expansion of 5G, and accelerating digitization inform our prediction of a super cycle for semiconductors. Exports of petroleum products will increase, backed by rising oil prices, KOTRA said.

“There are likely to be more opportunities for exporting items in new growth areas as leading countries maintain eco-friendly policies and begin expanding infrastructure in public health and healthcare. Demand for products in IT and the stay-at-home economy (such as processed food and computers) will remain steady as the virtual economy becomes part of our routine.”

“We are planting the seeds of opportunity based on the experience gained in this year’s crisis, which will open up new horizons for Korean exports next year,” said Kwon Pyung-oh, president of KOTRA.

By Cho Kye-wan, staff reporter

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