[Editorial] Rosy vision

By Korea Herald

Substantial pro-corporate steps needed to boost exports amid external uncertainties

Published : Jan 5, 2020 - 17:12
Updated : Jan 5, 2020 - 17:12

On Friday, President Moon Jae-in chose the country’s largest vehicle export port as the venue for his first field visit of the year. The move was seen as showing his government’s resolve to boost exports, a key pillar of the growth of the South Korean economy.

In his speech at the Pyeongtaek-Dangjin Port, Moon declared, “Today, we are starting a new decade to make a leap into the world’s big-four export powerhouses by 2030.”

His rosy vision appears out of tune with a continuous decline in outbound shipments from Asia’s fourth-largest economy.

The country’s exports fell 10.3 percent from a year earlier last year due partly to a slump in the global chip market coupled with the prolonged trade spat between the US and China, the world’s two largest economies. It marked the first time in a decade for annual exports to drop by a two-digit figure. In 2009, Korea’s exports fell 13.9 percent on-year in the aftermath of the global financial crisis.

With its outbound shipments remaining at $542.4 billion in 2019, down from $604.8 billion a year earlier, the country’s global ranking in export volume is seen to fall by a notch from sixth in 2018 to seventh last year.

Moon struck an upbeat note for 2020, saying the global economic and trade conditions would be better than last year.

He said the possibility of exports rebounding was shown in the December figures. The country’s exports slipped 5.2 percent on-year to $45.7 billion, extending the downward streak to 13 consecutive months.

What Moon saw as a positive sign seemed to be the fact that the decline in exports decelerated to a single-digit figure for the first time in seven months.

A presidential aide also noted that shipments to China, the country’s largest export market, marked the first on-year increase in 14 months.

But such improved figures just reflected a base effect from a reduction in exports a year earlier. In December last year, the country’s overall exports dropped 1.2 percent, with its shipments to China shrinking 13.9 percent.

Taking the base effect into consideration, it would have been a disappointing figure if the country’s exports last month stood at a level similar to that a year earlier.

Contrary to Moon’s rosy view, the local business community has expressed concerns about the prospect of exports in the coming year, cautioning external conditions are unlikely to be as bright as Moon expected.

Speaking at a New Year’s meeting attended by corporate, political and government officials last week, Park Yong-maan, chairman of the Korea Chamber of Commerce and Industry, said the path for exports might be narrowed due to hegemonic rivalry between economic powers.

Economists predict that the US and China, which account for nearly 40 percent of Korea’s exports, will likely see their economic growth slow from an estimated 6.5 percent and 2.3 percent in 2019 to below 6 percent and 2 percent, respectively, this year.

It should also be noted that the fundamental reason for the continuous decline in exports is the weakening of the country’s industrial competitiveness. In recent years, Korean companies in traditional manufacturing sectors have been caught up with by their rivals from China and other emerging nations.

What is needed now is to push for sweeping regulatory and labor reforms to help boost the sagging competitiveness of major manufacturing industries and nurture new growth engines.

During his visit to the car export port last week, Moon said that the government would make all-out efforts to turn export indicators into pluses and accelerate innovative growth. A day earlier, he renewed his pledge to abolish regulations that have protected vested interests.

But corporate leaders seem to have little trust in his promises. And their pessimistic reaction is no wonder, considering what the Moon administration has actually done over the course of years since it took office in May 2017.

Moon and his aides have pledged to abolish regulations that do not keep up with changes in industries and markets. But they have made little efforts to scrap them, adhering to the anti-business stance.

Its misguided policy that has dampened corporate activity is mainly responsible for the country’s estimated 2 percent growth last year -- the lowest in a decade. Moon and his economic team should think seriously of why business leaders applauded an opposition party leader’s criticism of the administration’s economic policy at last week’s meeting.

With less than half of Moon’s five-year term remaining, the administration should undertake regulatory and labor reforms in earnest to help boost exports and growth.

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The Korea Herald by Herald Corporation