S. Korea’s Exporters Seek High Return at High Risk

South Korea has an export portfolio that seeks a high return at a high risk, suggesting the nation’s exporters are vulnerable to cyclical movements of the global economy. This has raised the need to reduce the nation’s dependence on exports of petroleum products that are sensitive to economic cycles and diversify export markets that are currently heavily concentrated on Asia.

Korea’s exports have grown at a rapid pace with a portfolio that comprises several highly profitable products and export markets at the expense of bearing a proportionately high risk, according to a report released by the Korea International Trade Association(KITA). In the portfolio, the share of petroleum products, optical devices, cars and steel out of total exports has increased since mid-2000s, leading to a larger profitability and risk.

Korea was expected to have the highest profitability among the world’s top seven exporters, and carried the second-largest fluctuation risk following that of the Netherlands. The nation carries a high risk because its major  exports are sensitive to global cyclical movements. The risk heightened especially because petroleum products have accounted for an increasingly larger share of the nation’s overall exports since 2003.

Korea was expected to have the highest profitability among the world’s top seven exporters, and carried the second-largest fluctuation risk following that of the Netherlands. The nation carries a high risk because its major exports are sensitive to global cyclical movements. The risk heightened especially because petroleum products have accounted for an increasingly larger share of the nation’s overall exports since 2003. Among the world’s seven largest exporters, Korea demonstrated the highest profitability expectation and risk. East Asia(37 percent) and Northeast Asia(13 percent), which account for over half of Korea’s exports, see rising demands for imports from the nation but the demands are highly likely to fluctuate.