SEOUL: With the prospects for Korea’s exports in the coming years dimming, there is increased pressure to expand domestic demand, particularly by promoting service industries through drastic deregulation.
A downturn in exports, which have shored up Asia’s fourth-largest economy in recent years amid sluggish domestic demand, could rattle it unless offset by an increase in local consumption and investment, experts say, report Agencies.
According to recent data from the Bank of Korea, exports made a 1.8 percentage point contribution to the country’s gross domestic product growth in the first quarter of this year, compared with a 0.3 percentage point contribution by domestic consumption.Many private research institutes remain skeptical about the chances the government’s growth target of 3 percent for this year will be reached. The view they increasingly share is that the economy as a whole is entering a slowdown.
Trade officials here expect Korea’s outbound shipments to record an on-year decrease in June. Last month, Korea’s exports rose 13.5 percent from a year earlier, rebounding from a 1.5 percent dip the previous month.
High base effects and shorter working days are cited by trade officials as the main reasons for the on-and-off monthly declines in outbound shipments of Korean products.
But experts say the many downside risks the country faces will make it difficult for its exports to remain on an upward trend.
Korea’s manufacturing exporters have been struggling to cope with mounting protectionism triggered by the US, intensifying competition from Chinese rivals and the strengthening won.
Recent data from the World Trade Organization showed the country’s export growth lagged behind the increase in global trade in the first quarter of this year.