Key researchers who analyze trends and information about domestic and foreign real economies analyzed that effects of COVID-19 will start to be applied to South Korean exports on full-scale starting from this month. They pointed out car, semiconductor, and display as items that will face the direct impact of COVID-19. They also expect that it will be inevitable before the current prediction that the amount of this year’s exports will increase by 2.5% compared to the amount of last year’s exports will change soon.

“While the number of exports in February was not fully based on COVID-19, South Korean exports will start to face effects of COVID-19 on full-scale starting from this month.” said Hong Sung-wook who is a member of Korea Institute for Industrial Economics & Trade’s Trend and Statistics Analysis Headquarters’ research committee while analyzing that the number of South Korean exports will go on a downward trend once again.

The amount of exports in February was $41.262 billion that is 4.5% increase compared to the amount of exports in February of 2019. The amount of exports finally rebounded after it decreased by 1.7% in December of 2018 and had gone on a downward trend for 14 months. The number of confirmed cases of COVID-19 in South Korea has increased rapidly since February after the first case was confirmed on the 20th of January.

Hong Sung-wook explained that the amount of exports had also dropped in 2003 when SARS broke out and it had dropped sharply starting from the month after the number of global confirmed cases had increased rapidly. This indicates that effects of COVID-19 on real economy will be truly felt starting from this month.

“Prerequisites for increased exports in 2020 are recovery of the semiconductor industry, normal economic growth rate of China, and eased trade war between the U.S. and China.” said Hong Sung-wook. “However, it is difficult to expect that semiconductor industry will recover this year and that the trade war between the U.S. and China will ease this year and there is a high chance that the economic growth rate will fall under 5%.”

Hong Sung-wook pointed out car, semiconductor, and display as items that will suffer most damage due to COVID-19 as they are sensitive to changes in economic growth rate of South Korea. He suggested that the South Korean Government needs to expand the export market through online and to provide financial liquidity for export companies that are facing difficulties in order to avoid the worst scenario to South Korea’s export market due to COVID-19.

Hyundai Research Institute also analyzed that the South Korean economy will stop go on a rebound trend due to COVID-19 and that there is a high chance the economy will go enter a double-dip recession. As South Korea’s major industries will face a problem with obtaining necessary parts and components from China between the end of the first quarter and the second quarter, there will be setbacks to productions and ultimately resulting in lower exports. Hyundai Research Institute also analyzed that there will be less demands for South Korean products due to the recession of the Chinese market and that exportation of South Korean products to the Chinese market will take a blow. In 2019, China was responsible for 25.1% and 21.3% of South Korea’s exports and imports respectively and was categorized as the country that South Korea has the highest level of dependence on.

“Although there is a high chance that our economy will recover in the second half, it is also difficult to eliminate the worst case as the recession continues.” said Department Head Joo Won of Hyundai Research Institute.