The United Nations Industrial Development Agency (UNIDO) announced the World Manufacturing Competitiveness Index (CIP) in July 2020 based on the 2018 indicators. South Korea ranks third after Germany and China among 152 countries in the world. CIP is a composite index of 8 items including per capita manufacturing value-added and manufacturing export value. It reflects the overall competitiveness of the manufacturing industry in each country. UNIDO publishes it every other year.
According to the "Korea Manufacturing Competitiveness" report issued by the Korea Industrial Research Institute, South Korea, which ranked 17th in 1990, continued to rise in rankings, surpassing the United States and Japan for the first-time last year, and leaping to third in the world. According to analysis, South Korea’s manufacturing industry has played a pillar role in economic growth and stable employment in the COVID-19 crisis. After the manufacturing industry’s contribution to economic growth plummeted to -1.6% in the second quarter of last year, it was -0.2% in the third quarter and 0% in the fourth quarter. The service industry was -0.8% in the third quarter of last year and -1.0% in the fourth quarter. Among 28 major countries, South Korea, which has the second-highest share of manufacturing, ranked fourth in terms of growth rate reduction compared to 2019 before the crisis and ranked sixth among 28 countries in terms of increase in the unemployment rate. The world economy last year the growth rate is -3.3%, but South Korea is -1.0%, which is due to the performance of South Korean manufacturing.
Affected by the strong manufacturing industry, South Korea ranks fourth in economic performance among the 28 major economies, and sixth from the bottom in terms of the unemployment rate increase. The contribution of manufacturing to economic growth has surpassed the traditional growth engine of the service industry for two consecutive quarters. As the domestic epidemic continues to fluctuate, it is difficult for domestic demand to drive economic growth. Fortunately, the manufacturing industry has maintained a good momentum, and the large increase in exports has driven the overall South Korean economy from negative to positive. South Korea’s recent surge in exports is mainly due to its main industries such as semiconductors, liquid crystal displays, and petrochemicals, which maintain the highest competitiveness in the world. Most of South Korea’s main industries are highly integrated into the international industrial chain, and we must attach great importance to the possibility and future direction of the global industrial chain restructuring brought about by the technological competition between China and the United States, and respond by diversifying the international market and improving industrial competitiveness.
Overview of South Korea's imports and exports in 2020 and December
The Ministry of Trade, Industry, and Energy of Korea announced the "Import and Export Trends for the Whole Year of 2020 and December". South Korea’s exports for the whole year of 2020 will be approximately US$512.8 billion, a decrease of 5.4% from 2019, and the value of imports will be approximately 467,230 million. The U.S. dollar decreased by 7.2% from 2019, and the trade surplus was approximately 45.62 billion U.S. dollars, maintaining a surplus for 12 consecutive years.
The Ministry of Trade, Industry, and Energy cited WTO statistics (January to October 2020). Although South Korea’s exports declined by 8.2% in 2020, it still ranks 4th among the world’s top 10 major exporting countries in terms of export growth rate. There are only 4 countries with single-digit growth or decline. Hong Kong’s exports grew by 0.9%, China grew by 0.4%, the Netherlands fell by 7.4%, South Korea fell by 8.2%, Belgium fell by 10.0%, Germany fell by 10.4%, and Italy fell by 0.9%. 11.3%, Japan decreased by 11.7%, the United States decreased by 14.5%, and France decreased by 17.7%.
Among the 20 major export items of South Korea in 2020 (customs clearance statistics from January 1 to December 31), compared with 2019, the items of increase in exports are 57.2% increase in computers, 54.4% increase in biotechnology and health care and 15.7 increase in cosmetics. %, semiconductors increased by 5.6%, agricultural and aquatic products increased by 4.5%, batteries increased by 1.3%, home appliances increased by 0.7%, and plastic products increased by 0.03%. The items with reduced exports include precision chemical raw materials decreased by 0.4%, ships decreased by 2.0%, robots decreased by 3.4%, wireless communication equipment decreased by 6.1%, general machinery decreased by 8.8%, monitors decreased by 12.2%, automobiles decreased by 13.1%, and textile fibers decreased by 13.2%. %, steel decreased by 14.4%, petrochemical decreased by 16.4%, auto parts decreased by 17.2%, and petroleum products decreased by 40.7%.
As for Korea’s major export regions (customs clearance statistics from January 1 to December 31), compared with 2019, exports to major regions in 2020 will only increase exports to the United States and Vietnam by 1.1% and 0.8% respectively. Exports to the European Union (EU) decreased by 1.2%, decreased by 2.7% to China, decreased by 6.3% to ASEAN countries (ASEAN), decreased by 11.8%, decreased by 11.8% to Japan, decreased by 15.3% to CIS, decreased by 16.9% to the Middle East, and decreased by 16.9% to Central and South America A reduction of 25.9%. As for the import situation of imported items in 2020, the import of capital goods and consumer goods increased by 14.5% and 0.6% respectively, while the import of intermediate goods and raw materials decreased by 6.1% and 26.6% respectively. Among the main energy resource projects, the import of gas decreased by 21.7% from the previous year, petroleum products decreased by 26.9%, coal decreased by 33.2%, and crude oil decreased by 36.7%.
Among South Korea’s 20 major export items in December 2020, compared with December 2019, shipping growth was 105.9%, biotechnology health care growth was 104.4%, wireless communication equipment growth was 39.8%, semiconductor growth was 30.0%), displays (28.0%), Home appliances (23.4%), robots (20.9%), cosmetics (16.8%), auto parts (15.6%), plastic products (15.3%), computers (14.7%), fine chemical raw materials (14.1%), agricultural and fishery food (11.2%), storage batteries (7.6%), textile fiber (2.9%) and general machinery (2.8%) grew. Petrochemical (-1.6%), automobiles (-4.4%), steel (-7.8%) and petroleum products (-36.5%) showed a decrease. In terms of major export regions, compared with the same period last year, exports to Vietnam increased by 35.8%, exports to the European Union (EU) increased by 26.4%, exports to Central and South America increased by 20.1%, and exports to ASEAN increase of 19.6%, an increase of 16.8% to India, an increase of 11.6% to the United States, an increase of 3.3% to China, and an increase of 1.4% to Japan. In addition, exports to CIS decreased by 5.5% compared with the same period last year and decreased by 33.1% to the Middle East.
In terms of import items, the imports of capital goods, consumer goods, and intermediate goods in December 2020 increased by 23.3%, 9.1%, and 4.1% respectively from the same month last year, while imports of raw materials decreased by 21.5%. Provisional customs clearance statistics, among the import situation of major energy resource projects decreased compared with the same month last year. Gas decreased by 28.0%, coal decreased by 31.8%, crude oil decreased by 35.4%, and petroleum products decreased by 56.3%.
According to the Minister of Korea’s Ministry of Trade, Industry and Energy Sung Yoon, South Korea’s exports in December last year maintained a record growth. Total exports and daily average export value have continued to increase for two consecutive months. The export value in December was the first in 25 months. The rate exceeds 50 billion U.S. dollars, and the increase rate is also in the double digits. Minister Cheng pointed out that although South Korea’s exports in 2020 will be affected by the external environment such as the new crown pneumonia epidemic, the spread of trade protectionism, and the decline in oil prices, every time it faces a crisis, it will rely on the competitiveness of South Korea’s manufacturing industry, the efforts of export manufacturers and the active promotion of the government. The cooperation between the private sector and the government, such as measures to improve export vitality, has successfully overcome difficulties.
South Korea’s exports last year were affected by the decline in global trade and the economic recession of major countries. In the second quarter, exports had severely declined by about 20% and faced a crisis. However, due to the government’s efforts to promote export recovery measures, the fourth quarter and the export in the second half of the year was the first time in two years that it resumed growth. In addition, the export of high value-added products such as system semiconductors, OLEDs, virus detection kits, and environmentally friendly automobiles has set a record in history. The proportion of exports of small and medium-sized enterprises has increased, and the consumer goods items such as cosmetics and agricultural and aquatic foods manufactured by small and medium-sized enterprises Exports are also the highest amount. South Korea’s export outlook is expected to be optimistic. However, uncertainties such as the spread of the new crown epidemic, the appointment of the US government, and trade protectionism still exist. The government will continue to promote all feasible policy responses in the new year.
In the future, relevant government departments will comprehensively guide online marketing, supply trade finance, and solve logistics problems, and promote support measures that can boost export vitality. In addition, they will actively expand emerging markets such as RCEP, Korea-Indonesia CEPA, and expand South Korea’s exports. It actively cultivates potential projects, accelerates the increase of the added value of export projects, and builds a Korean online platform to promote the entire digitalization of export marketing, finance, payment, and logistics, and strives to cultivate export enterprises and innovate trade structures.