South Korea is planning to push export expansion projects in sectors such as electric vehicles (EV), secondary batteries and hydrogen, on the back of a prolonged export downturn.
The country's trade and industry ministry (Motie) expects the nine projects to produce results in the short term. It seeks to achieve an export target of $26.3bn and win $31.4bn worth of foreign contracts through those projects this year, which will also help boost export momentum in the first half of 2024.
The move comes shortly after the ministry announced it plans to "spare no support" to foster EVs as a key export engine, with $11.1 trillion won ($8.15bn) to be invested in the sector. The country has been prioritising spending on measures to bolster its economy, such as higher funding allocated to green growth engines in its environment ministry budget, as South Korea continues to face economic uncertainties.
Government think-tank the Korean Development Institute (KDI) in September noted that the country's economic slowdown is easing, but uncertainties such as China's economic instability and rising global oil prices could "hinder the alleviation of economic downturns".
South Korea's exports have fallen for 12 consecutive months, with its September export earnings registering a 4.4pc decline on the year to $54.7bn. But this rate of decline already marked the lowest since October 2022, when exports started falling, according to Motie. Semiconductor exports fell by 14pc on the year to $9.9bn despite being the highest value since October 2022, while automobile exports rose for 15 straight months and were up by 9.5pc on the year.
The nation's manufacturing activity contracted for 15 consecutive months as its purchasing manager index (PMI), compiled by S&P Global, has remained below 50. Its latest PMI reading for September rose to 49.9, its highest during the 15-month period but still indicates a contracting manufacturing sector. A PMI reading above 50 points to an expansion in activity, while a reading below that level suggests a contraction.
But foreign direct investment (FDI) is still flowing into South Korea's strategic high-technology industries such as semiconductors and secondary batteries. The country secured $24bn of pledged FDI in January-September, up by 11pc from a year earlier and also marking an all-time high for FDI received during this period, according to Motie. Its manufacturing sector secured $9bn of the pledged FDI, up by 16pc on the year.
"We are now standing at a critical juncture in terms of achieving export growth. The government will mobilise all possible capabilities," said Motie's minister Bang Moon-kyu.
