South Korea, one of the world's top export powers, is facing challenges amid a slowing US economy.
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| Export to Korea. Image of a container ship leaving the port of Korea. (Source: koreatimes.co.kr) |
The latest report from the Bank of Korea (BoK) indicates that South Korean exports to the US, especially steel, chemicals and petroleum products, will decline if the world's largest economy weakens more than expected. US economic growth is expected to slow due to weak consumer spending, inflation and persistently high borrowing costs. However, there are hopes that the upcoming recession will be mitigated by investments related to artificial intelligence (AI) and immigration.
Figures from the BoK also show that chemicals accounted for 8.7 percent of South Korea’s exports to the US, followed by steel (6.8 percent) and petroleum products (4.9 percent). While exports have increased, risks are also rising. The slowdown in South Korea’s exports could be partly offset by increased exports of automobiles and machinery, two other strong sectors of South Korean industry.
Notably, information from the US Bureau of Labor Statistics shows that the country created 818,000 more jobs than initially forecast. This is a sign that the rate of job growth in the US is slowing, opening up the risk of an economic recession.
Weakness in manufacturing and employment in August has raised concerns about a US recession, which could have a spillover effect on Korean manufacturers looking to export markets. Risks such as higher import tariffs in the event of former US President Donald Trump’s re-election and the “electric vehicle cliff” are also major concerns for domestic automakers.
The Bank of Korea has advised Korean exporters to prepare flexible response plans. "Political uncertainties surrounding the US presidential election continue to affect business plans. Hyundai and Kia's transition to long-range electric vehicles (EREVs) is seen as an effective strategy to overcome the challenge of the prolonged 'electric vehicle cliff'," the bank said.
Faced with complex fluctuations in the international market, product diversification, finding new markets and investing in technology will be the key to helping Korean businesses overcome this difficult period.
The BoK has made the following specific recommendations for export businesses in the context of facing challenges from the US economic situation:
Prepare a flexible response plan: Export businesses are advised to prepare a flexible plan to be able to quickly adapt to market fluctuations and minimize risks.
Product diversification: Product diversification helps reduce dependence on specific industries, thereby increasing access to different markets and minimizing negative impacts from fluctuations in one industry.
Finding new markets: Finding and expanding new markets will help reduce the impact of fluctuations in current export markets, as well as create new development opportunities for businesses.
Investing in technology: Investing in new technology, especially artificial intelligence (AI) and other advanced technologies, helps increase productivity, improve product quality and increase competitiveness in the international market.
Source: https://baoquocte.vn/xuat-khau-han-quoc-doi-dien-voi-thach-thuc-tu-kinh-te-my-283747.html
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