Seoul: South Korea's annual exports have reached an unprecedented milestone, surpassing $700 billion for the first time, making the nation the sixth in the world to achieve this feat, following the United States, Germany, China, Japan, and the Netherlands. This achievement comes seven years after the country first recorded annual exports of $600 billion in 2018.
According to Yonhap News Agency, the growth in exports was achieved despite significant challenges such as tariff pressures from the United States and the ongoing US-China trade conflict. The global transition to artificial intelligence has driven unexpected demand, with semiconductors emerging as a key contributor, accounting for 24 percent of the total exports. Additionally, market diversification has helped South Korea overcome automobile tariff barriers, sustaining strong car exports to Europe, especially in hybrid vehicles. The popularity of Korean cultural content has also propelled food and cosmetics as new export growth engines.
Samsung Electronics has projected a record fourth-quarter operating profit exceeding 20 trillion won ($13.8 billion), signaling optimism for the coming year. Experts predict a continuing semiconductor supercycle, a crucial opportunity for South Korea, a global memory chip leader driven by Samsung Electronics and SK hynix. However, the nation faces formidable competition from China and Japan in the semiconductor and automobile sectors, with Japan striving to reclaim its leadership in semiconductor supply and Taiwan maintaining its dominance in foundry operations.
A business survey by the Federation of Korean Industries last month indicates that China could surpass South Korea in corporate competitiveness by 2030, affecting all of Korea's top 10 export items. With rising economic nationalism and the intensifying technological race, major economies are increasingly focusing on domestic industry development, supported by deregulation. Excessive regulation could hamper Korea's global competitiveness.
The Yellow Envelope Act, criticized for favoring labor unions, is set to take effect, potentially increasing corporate burdens. Meanwhile, China considers a massive policy package worth up to 104 trillion won for its semiconductor industry, while Korea's support remains limited to tax deductions.
For Korea to maintain its semiconductor industry leadership, the government needs to bolster research and infrastructure support, including power supply. The recent export success underscores the private sector's relentless efforts. In their New Year messages, business leaders emphasized the need for a growth-oriented environment to propel Korea's economy further.
The government and National Assembly must heed the business community's calls, prioritizing exchange-rate stability, as the weak Korean won against the US dollar has increased imported material costs. President Lee Jae Myung has pledged to eliminate unnecessary regulations, emphasizing the need for pro-business measures to support companies and sustain the momentum of Korea's impressive export performance.