South Korea has achieved an economic transformation unlike any other country in the world. While the country has faced various economic challenges last year due to the global economic downturn led by monetary tightening policies adopted by multiple major economies to control inflation rates and geopolitical issues from the Russo-Ukraine war and the Middle East conflict, based on the latest forecast, the country is expected to head into a strong recovery, directed by rising exports.
Trends Shaping South Korea's Economy in 2024H2
With new international partnerships and expanded trade deals, South Korea’s exports and overall economic outlook are expected to improve considerably for the coming years.
EVs and Automobiles to Thrive
The nation’s automobile exports have reached a record high of US$70.9 billion in 2023 according to recent reports. This record is led by the growth of eco-friendly vehicles – with sales of EV vehicles surging a whopping 65.7% – benefitting from exports to the North American and European markets. This growth is furthered by major cities in South Korea, such as Seoul, expecting to replace over 10% of existing vehicles with EV vehicles.
With the thriving development of electric vehicles, EV-related products such as EV batteries and EV charging stations are also forecasted to expand drastically. For instance, the South Korean Electric Vehicle Battery market is estimated to grow at a CAGR of 16% from 2024-2029.
Computer Chips and Semiconductors Demand Surges
South Korea is one of the world’s largest computer chips and semiconductor manufacturers. However, with the post-pandemic supply chain crisis and weakened global demand, the sales of these parts have consistently fallen from mid-2022 to late 2023 and have derailed the country’s strong GDP growth.
However, things are finally looking up again, as the Korean government has recently reported the first month of increasing chip sales after a year of declining performance. According to Bloomberg, South Korea’s semiconductor outputs have rocketed the most in 14 years, led by increasing global demand for AI-related memory functions and exports of computers. The recovery of global demand for this key Korean industry will play a decisive role in reversing pessimism for the country’s economy and driving 2024 economic outlooks.
Personalised Skincare & Cosmetics on the Rise
Korean skincare and beauty products have posted a largely consistent ascent in the global marketplace. While post-pandemic sales have faltered amidst global supply chain issues, other sub-sectors of Korean personal care products have maintained their strength throughout last year.
South Korean cosmetic experts believe that in recent years, Asian beauty consumers will pursue more personalised skincare tailored to their skin. Apart from personalised products, industry leaders are seeing a shift towards an interest in home beauty devices as a replacement for in-person beauty services.
In 2024 second half, the net outlook remains positive as new export partners from Southeast Asia, Oceania, and American markets are expected to play a larger role in cosmetic and skincare exports.
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Growing exports to the United States, Europe, and other East Asian countries are expected to make up the economic downturn difference and continue to drive Korea’s economic recovery.
Buyers and suppliers looking to expand their businesses in South Korea must take the initiative and find verified partners on trusted platforms such as HKTDC Sourcing to bring your business to the next level.
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[1] https://research.hktdc.com/en/data-and-profiles/infographics/south-korea
[2] https://www.koreatimes.co.kr/www/biz/2023/12/602_365764.html
[3] https://www.businesskorea.co.kr/news/articleView.html?idxno=209674
[4] https://www.koreaherald.com/view.php?ud=20231224000079
[6] https://www.mordorintelligence.com/industry-reports/south-korea-electric-vehicle-battery-market
[7] https://www.kedglobal.com/economy/newsView/ked202312010012
