Korea’s overall exports to grow 5.6% in 2024: KIET report

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South Korea’s semiconductor exports are expected to grow by double digits in 2024 to drive overall exports up by 5.6 percent, according to a forecast by a state-run research institute. The nation’s trade balance, which suffered large deficits for two consecutive years, is also expected to turn into a surplus next year as exports expand and imports decline. According to the 2024 Economic and Industrial Outlook released by the Korea Institute for Industrial Economics & Trade (KIET) on Monday, next year’s exports of all sectors except petrochemicals and secondary batteries are projected to grow from the current year.

Semiconductors are forecast to see the largest expansion in exports, up 15.9 percent from 2023. The sector was the major driving force behind the trade deficit in both 2022 and 2023 but is expected to see exports jump next year as global demand for information technology (IT) increases. Information and communication devices were also projected to show strong export growth at 12.7 percent as demand for smartphones recovers. Shipbuilding, which struggled this year, is likely to see its exports climb 10.2 percent next year as a large number of container ships ordered in 2021 are delivered. Biohealth and automobiles exports were also projected to increase by 4.6 percent and 2 percent respectively. Despite the improvement in exports in the second half of 2023, the country is expected to post a trade deficit of $13.6 billion for the year given the large deficit in the first half. But the trade balance is expected to move to positive territory in 2024 at a $26.5 billion surplus on the back of strong exports from key sectors including semiconductors and automobiles.

Next year’s oil prices are slated to remain at the same level as this year at $83 per barrel. The Korean won value was estimated to appreciate moderately to around 1,280 won per dollar.

But the report forecasts a more conservative outlook for the country’s economic growth next year at 2 percent, lower than the government’s earlier forecast of 2.4 percent and that of the Bank of Korea at 2.2 percent. While overall exports and capital investment will increase, domestic consumption growth will slow and construction investment contract due to high interest rates and inflation, the report added. Next year, private consumption is forecast to grow only 1.9 percent from a year earlier.

The report also noted that the United States could overtake China to become Korea’s top export destination as Chinse exports remain sluggish while those to the United States continue to grow.