South Korea's exports have reached an all-time high, yet expectations for a recovery in the overall manufacturing sector appear to be weakening. While the semiconductor industry continues to thrive due to increased demand from artificial intelligence (AI), other key manufacturing sectors are struggling with sluggish domestic demand, rising costs, and intensified global competition.
According to a report released on October 25 by the Korea Institute for Industrial Economics and Trade, the manufacturing outlook index for November dropped to 102, down 11 points from the previous month’s 113. Although it remains above the baseline of 100, expectations for economic improvement have significantly declined over the past month.
The outlook index is derived from a survey of experts across major domestic industries, with a score above 100 indicating a more optimistic view of future conditions compared to the previous month.
Key indicators for the manufacturing sector also showed a decline. The domestic outlook index for November fell to 101, down 10 points, while the export outlook dropped to 107, a decrease of 11 points. The production level outlook plummeted from 119 to 102, a drop of 17 points. The profitability outlook, which reflects corporate earnings, fell from 103 to 91, dipping below the baseline.
There were notable disparities among different sectors. The semiconductor outlook index rose to 159, an increase of 15 points from the previous month, driven by growing demand for high-bandwidth memory (HBM) due to investments in AI infrastructure by major global tech companies.
In contrast, the automotive sector saw a sharp decline, with its outlook index dropping from 123 to 93, a decrease of 30 points. The mobile phone sector fell from 100 to 53, a drop of 47 points. The chemical sector also declined from 106 to 89, while the machinery and materials sectors recorded outlooks of 97 and 95, respectively, both below the baseline.
Recent export figures reflect these sectoral disparities. While semiconductor exports surged, the benefits have not been evenly distributed across the manufacturing sector. According to the Korea Customs Service, South Korea's exports reached $121.05 billion last month, surpassing $120 billion for the first time on a monthly basis.
Among these, semiconductor exports amounted to $60.53 billion, marking the first time a single item exceeded $60 billion in monthly exports. However, exports of passenger cars (-5.6%), wireless communication devices (-1.5%), and home appliances (-7.6%) all experienced declines.
The challenges facing the manufacturing sector are multifaceted. According to the Bank of Korea's September business survey, the manufacturing business sentiment index (CBSI) fell to 99.5, down 4.3 points from the previous month. The primary concerns cited by manufacturers included sluggish domestic demand (21.2%) and rising raw material prices (20.9%).
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.