SEOUL-- Exports will remain a critical factor in South Korea's economic expansion next year, with shipments set to post 4.7 percent on-year growth led by robust sales of semiconductors, a local trade body forecast Wednesday.
At a press conference in Seoul, Kim Young-joo, chairman of the Korea International Trade Association (KITA), forecast exports will rise to US$602 billion next year from an estimated $575 billion for 2017.
"Not only robust sales of semiconductors but also local exporters' market diversification efforts will remain major contributors fueling the country's exports in the new year," the KITA chairman told reporters.
This year, exports are projected to jump 16 percent from a year earlier on increased shipments of information technology products, including electronics, as well as steel and petrochemical products, Kim said.
"Exporters' diversification of their markets beyond the United States and China into India and other emerging countries from the Association of Southeast Asian Nations (ASEAN) also helped," he explained.
Outbound shipments are likely to contribute 70 percent to 80 percent of the country's estimated economic growth of 3.2 percent this year. South Korea's economy is projected to grow 3 percent next year, he said.
As for challenges ahead, the chairman picked the Korean won's strength vis-a-vis the U.S. dollar as a key risk factor for local companies in 2018. He projected the Korean currency will average at around 1,100 won to the greenback in the new year.
In the January-October period, the was dollar worth an average of 1,138 won. A stronger won drives down the value of dollar-denominated earnings in an exporter when converted into the local currency. It also causes prices of locally made goods to go up in overseas markets.
He advised local companies, particularly small and medium-sized ones, to buy an insurance policy that helps them defend against any sharp losses from a strong won next year.
Meanwhile, imports are expected to rise 6.3 percent to $508 billion in 2018, resulting in a trade surplus of $94 billion, KITA said.
Source: Yonhap News Agency