Recently, the World Trade Organization (WTO) released the “Global Trade Outlook and Statistics” report, which predicts that global merchandise trade volume will grow by 1.7% this year, which is lower than last year and lower than the average growth rate of the past 12 years. The ongoing conflict between Russia and Ukraine and high inflation are the main factors leading to the slowdown in the growth of merchandise trade volume.
It is worth noting that as the world relaxes the control of the new crown epidemic, consumers have also changed their high demand for electronic products, home furnishings, and fitness products during the control period, and began to turn to travel, catering and other services. Exporting countries in Asia are also affected.
Before the release of the WTO report, many major exporting countries in Asia released new export data. Exports from South Korea and Vietnam continued to decline due to weak demand in Europe and the United States, with South Korea’s exports falling year-on-year for six consecutive months.
South Korea’s exports continue to decline significantly
Data released by South Korea’s Ministry of Trade this month showed that South Korea’s exports fell 13.6% year-on-year in March, marking the sixth consecutive month of decline.
According to data released by the Korean Customs Service, South Korea’s exports in the first 10 days of April fell 8.6% year-on-year to US$14 billion, with a trade deficit of US$3.41 billion. Chip exports continued to decline sharply, with chip exports falling 39.8% in the first 10 days of April to US$1.77 billion. South Korea’s exports of petroleum and steel products decreased by 19.9% and 15.1% respectively to US$1.1 billion and US$1 billion.
In terms of export destinations, exports to the United States increased by 32.1% to US$30 billion;Exports to China decreased by 31.9% to US$2.66 billion;Exports to the EU increased by 14.5% to $1.57 billion.
Exports may drag down South Korea’s economic recovery
According to Yonhap News Agency, the Korea Development Institute (KDI, a Korean think tank) released the “April Economic Trends” on the 9th, stating that although the sluggish domestic demand has eased,Due to a significant reduction in export trade, South Korea’s economy is likely to remain sluggish.
According to reports, the March report pointed out that “exports shrank, domestic demand slowed, and the economy continued to be sluggish.” The evaluation for that month was relatively positive compared to the previous one. The Korea Development Institute pointed out that sluggish domestic demand has eased, driven by the service industry.
The report shows that with the further release of tourism consumption demand, the growth rate of contact service industry production increased from 4.8% in the same period last year to 7.2%, and retail sales rebounded from -0.9% to -0.8%. Some people pointed out that as the service industry rebounded, although the overseas banking industry continued to explode, the domestic financial market was overall relatively stable.
The Korea Development Institute believes that due to the global economic slowdown leading to shrinking exports, weakness in industries led by manufacturing continues to drag down South Korea’s economic growth. Exports in March fell by 13.6% year-on-year, further widening the decline in February (-7.5%). As exports of major items such as semiconductors continue to be sluggish, the manufacturing industry will continue to suffer from high inventory and low operating conditions, resulting in a significant reduction in production. In addition, the growth of employment in the service industry has also slowed down.
In addition,The financial soundness of more than half of South Korea’s major listed companies will deteriorate in 2022 under the influence of high global interest rates and inflation. Data from the Korea Exchange show that among the 106 listed companies under South Korea’s 10 largest conglomerates last year, the liabilities and equity of 56 were The rate was up from the previous year. Among them, as many as 21 companies have a debt-to-equity ratio of more than 200%.
Investment by Korean companies in Vietnam plunged by more than 70% in the first quarter
In addition to South Korea, Vietnam’s export data is also not optimistic. Data released by the Vietnamese government at the end of March showed that Vietnam’s exports fell by 11.9% year-on-year in the first quarter. Among them, the export value of smartphones, the largest source of export revenue, fell by 15%, and the shipment of electronic products fell by 10.9%.
Vietnam is one of the world’s largest exporters of clothing, footwear and furniture. However, Tran Thi Thu, deputy director of the General Account Statistics Department of the Vietnam Statistics Bureau, revealed that in the first quarter of this year, the country’s textile and footwear orders fell by 70% to 80% year-on-year.
Data from Vietnam’s Ministry of Planning and Investment show that from January to March this year, the total investment by Korean companies in Vietnam was US$474 million, a decrease of 70.4% compared with the same period last year. It is estimated that the local business of Korean companies accounts for 35% of Vietnam’s exports, of which Samsung Electronics and other electronics companies account for about 25%.
The data also showed that overall foreign investment in Vietnam fell by 38.3% year-on-year in the first quarter to approximately US$5.4 billion, almost half the level in the first quarter of 2019 before the epidemic.
Experts said that Vietnam��Tighter regulations on labor licensing and fire protection facility approvals are the main factors leading to the decline in investment in South Korea. In addition, declining sales due to the global economic slowdown, the rise of the Indian market, and financing difficulties due to high interest rates are also among the reasons.
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