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KOREA REPORT - MARCH, 2023.
TOPICS.
President Yoon Suk Yeol and Japanese PM Fumio Kishida agreed to open up a new era of Korea-Japan ties during their summit in Tokyo on 16th, stressing the need to bolster security and economic cooperation for future generations and to deter evolving threats from NK. Yoon said the summit, the first in 12 years, signified a fresh start of bilateral ties, calling Japan a partner with common values and goals. Two leaders agreed to resume ¡°shuttle diplomacy¡± that is ¡°free from any format,¡± and to normalize a suspended military intelligence sharing pact and restore consultations between the two governments on diplomatic, economic and cultural relations. Two also said they have no plans to seek reimbursement from Japan in terms of compensation for forced labor victims.
Korea International Trade Association on 28th warned that Korea's trade deficit could expand by up to $41 bil by the end of the year in the worst-case scenario. If SKorea's export slump persists until end of the year, KITA sees that annual export volume could fall by 8%. "While automotive, shipbuilding and petroleum industries are expected to recover after second quarter, semiconductor, computer and display industries are expected to continue to struggle throughout the year,¡± KITA Vice Chairman Jeong Marn-ki said. KITA¡¯s second quarter export industry outlook index recorded 90.9, falling below the benchmark (100) for fifth consecutive quarter. Although the outlook is not bright, Jeong highlighted that the index has improved slightly compared to the outlook for fourth quarter of last year (84.4) and the first quarter of this year (81.8), due to expectations related to China's reopening.
Fitch Ratings said on 13th it has reaffirmed SKorea's sovereign rating at "AA-" with a stable outlook, while suggesting an economic growth of 1.2% this year. Fitch's rating for SKorea has been AA-, fourth-highest level on the agency's table, since Sept 2012. OECD on 17th revised down SKorea's growth outlook for 2023 to 1.6%, as global economy continues to stand on "fragile" grounds amid uncertainties. The latest outlook marked a 0.2% drop from a 1.8% growth projection in Nov.
SKorea suffered a trade deficit of $4.62 bil in March, first time since 1997 that the country has logged a trade deficit for 13 months in a row. Exports fell 13.6% on-year to $55.12 bil, falling for sixth consecutive month, due mainly to weak global demand for semiconductors amid an economic slowdown. Semiconductors dived 34.5% on falling demand and a drop in chip prices. Imports fell 6.4% on-year to $59.75 bil, as the country's energy imports went down 11.1% on-year.
SKorea will build world's largest high-tech chip cluster in Yongin, Gyeonggi Province, with SEC taking the lead in KW300 tril ($230 bil) project. The plan, unveiled during presidential meeting with Cabinet members on 15th, is aimed at boosting nation's competitiveness in chip industry. SEC and the government plan to build five high-tech semiconductor manufacturing plants by 2042 and attract up to 150 domestic and foreign materials, parts and equipment companies. The firm expected to induce direct and indirect production of KW700 tril and create employment for 1.6 mil people in Korea. Separately, government will create 14 new national high-tech industrial complexes with area of 33 mil sqm to foster high-tech industries such as space, future cars and hydrogen.
Hyundai Motor (HMC) has become world¡¯s third-largest carmaker in terms of sales, an impressive feat after more than two decades since it made it to global top 10 list in 2000. HMC sold total of 6.8 mil vehicles in 2023, third highest after Toyota¡¯s 14.8 mil units and Volkswagen¡¯s 8.5 mil units. The sales figure outpaced Renault-Nissan Alliance's 6.2 mil units, General Motors' 5.9 mil units and Stellantis' 5.8 mil units. HMC had remained fifth-largest carmaker until 2020, when it climbed into the No 4 spot.
SKorea's foreign reserves came to $426.07 bil as of end March, up $780 mil on-month, as dollar's descent increased conversion value of holdings in other currencies, according to Bank of Korea. Foreign securities had been valued at $377.59 bil, up $3.09 bil on-month, accounting 88.6% of total foreign reserves. The value of deposits stood at $24.14 bil in March, down $2.61 bil on-month. SKorea had been ranked world's ninth-largest holder of foreign reserves at the end of Feb.
SKorea's consumer prices rose 4.2% on-year in March, slowing from rise of 4.8% tallied in Feb, according to Statistics Korea. The prices of utility services went up 28.4% on-year amid prolonged war between Russia and Ukraine. The prices of agricultural, fisheries and livestock products rose 3% on-year and industrial product prices increased 2.9%, led by higher bread and cosmetics costs. Those of gasoline and diesel, on the other hand, fell 17.5% and 15%. Prices of services increased 3.8% on-year, due to higher insurance and housing management costs. Core inflation rose 4% on-year.
Hanwha Group is in the final stages of acquiring DSME, following recent approval from competition authorities in China and Singapore. According to industry sources, the acquisition began last year and has a formal contract signed. However, it had to pass the screening of eight competition authorities worldwide before it could be finalized. In Feb, Turkey and the UK approved the merger, while Japanese and Vietnamese authorities approved it earlier this month. The biggest obstacle expected is screening by the EU, whose results are set to be revealed on April 18th. Read more¡¦
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