Containers for exports and imports are stacked at a pier in Busan, Nov. 1. Yonhap
Korea's exports are expected to grow 2.2 percent on-year in 2025, driven by robust performance of premium semiconductor products, although anticipated changes in U.S. trade policy may weigh down on the growth, a state-run think tank said Monday.
The projection marks a slowdown from the 8.4 percent growth estimated for 2024, according to a report released by the Korea Institute for Industrial Economics and Trade (KIET).
"Exports are set to slow due to the base effect, but backed by the recovery of major IT sectors, such as semiconductors, outbound shipments will continue to grow," the institute said, adding that the country's trade surplus is expected to reach $48.7 billion, slightly up from $47.4 billion projected for this year.
"However, the new Donald Trump administration's blanket tariff policies may weigh down on Korea's automobile shipments to the United States, significantly impacting overall exports," it added.
Trump has been proposing sweeping tariffs of at least 10 percent, and up to 20 percent, on all imported goods.
Should exports meet the target, it will mark the first time Korea's annual shipments surpass the landmark $700 billion. The KIET estimated this year's outbound shipments to reach $685.5 billion.
Imports are anticipated to grow 2.1 percent on-year in 2025, marking a turnaround from the estimated decrease of 0.7 percent in 2024.
"While foreign exchange rates and global crude prices are expected to remain stable, imports are likely to rise slightly due to higher demand for intermediate goods amid stronger exports," said the report.
"The slowing demand in major export destinations and expanded overseas production will lead to a 2.7 percent decrease in exports by the automobile sector, including auto parts," it added.
The think tank, however, offered a positive outlook for the semiconductor industry, forecasting an 8.5 percent on-year growth on rising demand for IT products amid improving consumer sentiment and recovery in global chip prices.
On the other hand, exports of batteries are expected to decrease 6.7 percent on-year in 2025, partly due to a slowdown in global demand for electric vehicles, the KIET added.
The KIET, meanwhile, projected economic growth of 2.1 percent for 2025, slightly down from this year's estimate of 2.2 percent.
The estimate aligns with the Bank of Korea's projection made in August but is slightly higher than the 2 percent suggested by the International Monetary Fund.
"While investment in the construction sector is anticipated to remain sluggish in 2025, exports are expected to maintain growth. With domestic consumption and facility investment also gradually recovering, overall growth is expected to reach 2.1 percent," the KIET said.
The KIET added that economic growth for the first half of 2025 is expected to reach 1.9 percent, while growth in the July-December period will be slightly higher at 2.2 percent. (Yonhap)