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KOREA REPORT - JANUARY, 2023.

TOPICS.

Wearing face masks will no longer be required indoors in Korea starting Jan 30th, PM Han Duk-soo said on 20th. Places that will be mask-free include schools, kindergartens, child care centers and department stores. Also on mask-free list are outdoor and indoor spaces at subway and train stations and airports. Requirement to wear face masks at virus-prone facilities such as hospitals, long-term care facilities, pharmacies and public transportation like chartered buses, taxis and flights is still in place. The seven-day quarantine requirement for those infected is still valid. Jan 30th marks three years since Korea identified its first case of COVID-19.

The UAE decided on 15th to invest $30 bil (KW37 tril) in SKorea at a summit held between President Yoon and Emirati leader Sheikh Mohammed bin Zayed Al Nahyan. The $30 bil is considered to be the largest-ever investment in a single country by the UAE. Previously, the largest cross-border investment by the UAE was $12.2 bil in the UK. The UAE plans through its sovereign fund to invest $30 bil over the next few years in high-level next-generation nuclear power such as small modular reactors, energy technologies using hydrogen, renewable energy such as wind and solar power, and defense. Two leaders also confirmed they would strengthen strategic cooperation in nuclear and hydrogen energy in the UAE’s post-oil era, as well as collaboration in space, carbon emissions and technological innovation. Read more…

Concerns over deepening economic slowdown and a bleak outlook for global business conditions, experts predicted that this year SKorea’s economy would fall deep into a dark and chaotic situation. Korea Chamber of Commerce and Industry summarized the opinions of 85 economics and management experts including university professors as "falling down the rabbit hole." It includes inflation at levels not seen for decades, an unprecedented period of long-term low growth and rapidly changing export paradigm. The group of experts painted a gloomier outlook for 2023 than those forecast by major institutions. They said the economy would grow at around 1.25%, while Bank of Korea and the International Monetary Fund predicted rates of 1.7% and 2.0%. The largest economic risks that the country faces are high interest rates, followed by rising inflation and raw material prices, slow exports, and sluggish domestic consumption.

SKorea reached a record-high monthly trade deficit of $12.69 bil in Jan, mainly due to weakening global demand for semiconductors, according to Ministry of Trade, Industry and Energy. While outbound shipments fell 16.6% on-year to $46.27 bil, the largest drop in three years, imports slipped 2.6% on-year to $58.96 bil. The figure broke the previous record high of $9.43 bil in Aug last year. It is also the first time that the country saw a trade deficit for 11 consecutive months since 1997. In Jan, exports of semiconductors recorded $6 bil, down 44.5% on-year.

PERFORMANCE OF FOURTH QUARTER

Hyundai Motor Group Executive Chair Chung Euisun has been named MotorTrend Person of the Year, it announced on 12th. With the award, Chung topped the US automobile magazine's list of the 50 most influential figures in global automotive industry. He was ranked fifth in last year’s rankings. MotorTrend acknowledged Chung for leading Hyundai Motor Group into a new age, underscoring that the vehicles developed under his leadership are notable for their “eye-catching design, quality, clever packaging and good value” and that Korean-made vehicles are “proving increasingly difficult to beat.”

SKorea's foreign reserves come to $429.97 bil as of end Jan, up $6.81 bil on-month, driven by weak dollar that bolstered the dollar-converted value of other currency-based assets. Foreign securities, such as US Treasuries, had been valued at $371.42 bil as of end Jan, which accounted for 86.4% of total foreign reserves. The value of deposits stood at $34.17 bil, which made up 7.9% of the total. SKorea was ranked world's ninth-largest holder of foreign reserves as of end Dec.

Bank of Korea on 13th raised the benchmark rate from 3.25% to 3.5%, the highest level since 2008, to tame inflation. It was the seventh straight rate increase since April last year, the longest span of tightening. It is also the highest figure in more than 14 years, since the rate stood at 4% in Nov 2008.

SKorea's consumer prices rose 5.2% on-year in Jan, as energy costs shot up to a record level, amid expectations inflation will gradually slow throughout 2023. The prices of utility services went up 28.3% on-year in Jan amid prolonged war between Russia and Ukraine, the sharpest growth since 2010. The price of agricultural, fisheries and livestock products moved up 1.1% on-year, price of chicken shot up 18.5% and that of rice decreased 9.3%. Industrial product prices increased 6% on-year, due mainly to rises in diesel and bread costs. Core inflation rose 4.1% on-year in Jan.

Competition and Consumer Commission of Singapore (CCCS) started its review of Hanwha Group's acquisition of DSME, according to industry sources. Hanwha believes acquisition will have little impact on the competitiveness of Singaporean market. However, CCCS requested Hanwha Group to submit a letter of application due to group's business activities in Singapore, which Hanwha Group submitted on 16th. The law prohibits any business takeover that could weaken competitiveness of Singaporean market. CCCS will be collecting public opinions until Feb 3rd. The countries that will evaluate corporate combination are SKorea, the EU, Japan, China, Singapore, Turkey, Vietnam, and the UK. Read more…

Three units of KSOE have released their sales forecast for 2023. According to HHI, its sales forecast for 2023 is KW12.12 tril ($9,529 mil), HMD expects sales to reach KW4.152 tril in 2023 and HSHI announced its 2023 sales forecast of KW6.51 tril. Read more…

The Korean government dramatically increased the budget for development of eco-friendly ships this year. Ministry of Trade Industry and Energy (MOTIE) announced 2023’s eco-friendly ship development implementation plan on 30th. This year’s eco-friendly budget is KW145.4 bil ($115.8 mil), increasing by 52% from KW95.6 bil in 2022 to KW145.4 bil. The project will be carried out jointly by the MOTIE, the Ministry of Oceans and Fisheries (MOF), and the Ministry of SMEs and Startups (MSS). Key technologies for carbon-free ships include hydrogen or ammonia-fueled engine, and propulsion systems for electric ships. Looking at each field, a total of 73 tasks will be carried out in four major areas. Read more…

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