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KOREA REPORT - APRIL, 2023.
TOPICS.
President Yoon Suk Yeol arrived in Washington on 24th for a six-day state visit expecting to strengthen the allies' response to NK's nuclear threat and other challenges in a symbolic year marking the 70th anniversary of the alliance. Leaders of SKorea and the US adopted a declaration to strengthen extended deterrence against provocations from NK at their summit on 26th, in an agreement that formalized consultations with Seoul on the decision making process. Under the Washington Declaration, SKorea and the US will launch a nuclear consultation group as a new mechanism to focus on nuclear and strategic planning issues. Read more¡¦
SKorea on 24th put Japan back on its "white list" of trusted trading partners, three years after the removal. Ministry of Trade, Industry and Energy issued a revision to its public notice on exports and imports of strategic items, allowing companies to enjoy shorter period of time for review and simpler paperwork. The move raised number of nations given preferential treatment in trade to 29, which includes the US, France and Britain. Japan lifted curbs on exports to Seoul of three materials in March, fluorinated polyimide, photoresist and hydrogen fluoride, that are critical for production of semiconductors and displays, which had been in place since 2019.
Local governments and private companies in SKorea have been ramping up efforts for the country's bid to bring the World Expo to Busan in 2030. Hosting the 2030 World Expo has been a long-standing goal for Korea, who started on the path to candidacy in 2014. In 2019, the bid for the World's Fair was designated as an important national project, prompting the establishment of a joint public-private bidding committee, which has been up and running since last year. Read more¡¦
SKorea's national debt is growing at an alarming pace, posting a record high of over KW1,067 tril ($811 bil) last year, Finance Ministry said on 4th. The figure has been increasing by around KW100 bil won every year, surpassing KW600 tril in 2016, KW700 tril in 2019, KW800 tril in 2020 and KW900 tril in 2021. The debt to GDP ratio has reached 49.6% last year. The assets totaled KW2,836 tril last year, down KW29.8 tril on-year. This was the first time for the asset to decrease since 2011.
SKorea logged trade deficit of $2.62 bil in April, staying in the red for 14th month. Outbound shipments decline 14.2% on-year to $49.6 bil, as the chip industry experienced worst slump of sagging demand and prices. Inbound shipments also decreased by 13.3% on-year to $52.23 bil. In April, exports of automobiles and ships increase by 40.3% and 59.2% on-year, respectively. However, outbound shipment of chips fell by 41% and exports of display and steel products also decreased by 29.3% and 10.7 %, respectively.
PERFORMANCE OF FIRST QUARTER
SKorea's foreign reserves came to $426.67 bil in April, up $610 mil on-month, as dollar's descent increased conversion value of holdings in other currencies, according to Bank of Korea. Foreign securities was valued at $374.3 bil as of end-April, down $3.25 bil on-month, which accounted for 87.7% of foreign reserves. SKorea ranked as world's ninth-largest holder of foreign reserves as of end March.
SKorea's consumer prices rose 3.7% on-year in April, on falling global oil prices, the latest signal that inflation has receded, according to Statistics Korea. It is the first time in 14 months that the on-year inflation growth fell below 4%. Prices of petroleum products fell 16.4% on-year, marking the sharpest decline since May 2020. The prices of agricultural, fisheries, and livestock products rose 1% on-year. Those of utility services climbed 23.7% on-year. Core inflation rose 4.6% on-year in April.
Hanwha Group has successfully overcome the last obstacle in its acquisition of DSME, receiving final approval from SKorea's Fair Trade Commission. On 27th, FTC announced conclusion of its final review of Hanwha Group's acquisition of DSME. FTC granted approval for five Hanwha Group subsidiaries, including Hanwha Aerospace and Hanwha Systems, to acquire a 49.3% stake in DSME. This approval is contingent with specified corrective measures designed to prevent unfair and discriminatory practices, such as unjustly estimating price of ship-mounted equipment, refusing competitors' requests for technical information related to ship-mounted equipment in defense acquisition projects and sharing confidential information obtained from competitors with affiliated companies. Read more¡¦
HD KSOE reported first-quarter results for 2023, which included KW4.824 tril ($3.661 bil) in sales, KW58.5 bil in operating profit, and a net loss of KW81.1 bil. In comparison to 4Q 2022, sales dropped by 2%, and operating profit fell by 50%. Despite ongoing net losses, they decreased by 62% from KW212.3 bil in the previous quarter. Compared to first quarter of 2022, sales grew by 24% and operating profit shifted from a loss of KW396.4 bil to a surplus. The net loss experienced a significant 72% reduction from KW293.2 bil. HD KSOE attributed the performance to an increase in construction volume and commencement of sales for high-value-added ships, such as LNG carriers.
There is resurgence in performance of mid-sized SKorean shipbuilders, driven by increased demand for replacing aging vessels. In first quarter, these shipbuilders more than doubled their performance compared to same period last year. According to KOSHIPA, mid-sized SKorean shipbuilders' order volume reached 291,905 cgt, up 131% on-year. DH Shipbuilding secured 5 units (150,695 cgt), HJ Shipbuilding & Construction secured 2 units (92,218 cgt) and K Shipbuilding secured 2 units (48,992 cgt). Read more¡¦
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