Trade Volume Reaches $500 Billion

Korea’s trade volume has reached $500 billion (about 500 trillion won).

Seventeen years have passed since it surpassed $100 billion in 1988, and one year has passed since it exceeded $400 billion last year.

Korea’s ranking in terms of its trade volume, which was 12th as of last year, is certain to reach 11th, surpassing Hong Kong, this year.

According to the Ministry of Commerce, Industry and Energy (MOCIE) and Korea International Trade Association (KITA) yesterday, Korea’s accumulated export volume as of November 22 was $250.5 billion, its import volume was $230.7 billion, and its trade volume was $481.2 billion.

If this trend continues, its trade volume early next month would surpass $500 billion, and it would reach $545 billion by the year-end, according to the MOCIE.

This is a bigger volume that the total trade volume last year of 38 Latin American countries ($513.6 billion), except for Mexico and that of 53 African countries ($443.5 billion).

Korea’s trade volume has grown at an unprecedentedly fast pace, surpassing one billion dollars in 1967; it hit $10 billion in 1974 and $300 billion in 2000.

If this pace continues, Korea may expect to enter the top 10 in terms of trade volume within one to two years.

The trade volume of Canada and Belgium, ranking 9th and 10th, respectively, is $615 billion and $594 billion, respectively, which shows not much of a gap with Korea.

Such a fast increase was possible thanks to the recent higher productivity levels in major industries, including semiconductors, mobile phones, automobiles, shipbuilding, and steel, which expanded Korea’s total export volumes.

According to the Samsung Economic Research Institute, higher productivity contributed to export volumes by 34 percent before the financial crisis from 1991 to 1997. However, in the post-crisis era from 1998 to 2004, this increased by 15 percentage points to 49 percent. It shows Korea’s international competitiveness in major industries has been boosted.

Due to skyrocketing oil prices, which lead to higher import prices, the costs of imports rose to a great extent. In particular, Dubai crude rose from $33.74 per barrel last year to $49.20 this year by almost 50 percent, which overall raised the prices of imported products.

Lee Jae-hoon, bureau chief of the MOCIE, said, “Out of the total import volumes, those for exporting take up about 40 percent, so increases in import volumes do not necessarily show negative signs,” adding, “A trade volumes surpassing $500 billion proves Korea is now an advanced trading nation.”

However, the top five categories take up about 50 percent out of the total export volume, showing the industrial structure is rather tilted, and Korea’s export-led economy, with a sluggish domestic market, urgently needs solutions.

Chang-Won Kim changkim@donga.com