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KOREA REPORT - JULY 2022.
economy is feared to slow down, as inflationary pressure has mounted and export growth could lose steam amid deteriorating external
economic conditions, finance ministry said on 20th. Market volatility and global
economic downside risks further increased, led by Federal Reserve's fast rate
hikes, China's economic slowdown, and protracted war between Russia and
Ukraine. Concerns about stagflation have increased due to heightened external
economic uncertainty. Inflationary pressure has rapidly built up, as crude oil
and commodity prices have soared and continued supply chain disruptions. Recovery
in demand from pandemic also pushed up price pressure.
revised down its prediction on gross domestic product growth of Korea by 0.2%
to 2.3%, citing global inflationary pressure, slowdown of China¡¯s economy
and the war between Ukraine and Russia. It drastically revised its forecast on
2023 growth of Korea down to 2.1%, from its earlier suggestion of 2.9%.
posted trade deficit of $4.6 bil in July, in the wake of noteworthy decline in
exports to China as well as spiraling import prices of raw materials, with
cumulative deficit for first seven months of the year hitting the highest in 66
years. This marked first time since 2008 that Korea has recorded a trade
deficit for four consecutive months. Exports came to $60.7 bil in July, up 9.4%
on-year. Imports surged by 21.8% on-year to hit record-high of $65.3 bil.
Outbound shipments of petroleum products increased by 67.2% on-year, vessels by
29.2%, automobiles by 25.3% and secondary batteries by 11.8%. Imports of wheat
and corn increased by 29.1% and 47.6%.
groups in SKorea are looking to rethink their ambitious investment plans that
were announced earlier this year as fears of global
recession are clouding their business outlook. According to industry sources on
18th, SK hynix recently delayed decision on its KW4 tril ($3 bil) expansion
plan for local production facilities. It had planned to build new plant, called
M17, in Cheongju, North Chungcheong Province, with construction set to start
early next year with completion by 2025. Read more¡¦
OF SECOND QUARTER
Electronics (SEC) floated an idea of investing $192.1 bil to build 11 more chip
plants in the US over next two decades,
documents filed with state of Texas showed on 22nd. SEC is seeking tax breaks
for potential construction of 11 new chip fabrication facilities in the state,
nine in Taylor and two in Austin. SEC already has a giant chip plant in Austin,
while it is building a $17 bil plant in the nearby Taylor.
Group Chairman Chey Tae-won on 26th announced it¡¯s new $22 bil investment plan
in the US in his meeting with President Biden at the White House. Biden in
return touted SK¡¯s multi-billion dollar commitment as one of the ¡°most
significant investments¡± ever seen in the US. ¡°All this means that SK will
invest in nearly $30 bil going forward, expanding on our recent announcement of
$7 bil investment in EV batteries,¡± Chey told Biden. In Oct last year, Chey
announced plans to invest combined $52 bil into the US by 2030.
foreign reserves came to $438.61 bil as of end July, up
$330 mil on-month, thanks to increased operation profits and expanded deposits
in foreign currency. Securities were valued at $391.85 bil, down $3.42 bil
on-month, accounting for 89.3% of total foreign reserves. SKorea was world's
ninth-largest holder of foreign reserves as of end June.
consumer prices soared 6.3% on-year in July,
marking sharpest on-year increase since Nov 1998, due to high energy and food
prices, raising expectations that the central bank will continue to raise
policy rate to tame inflation. Prices of agricultural, livestock and fisheries
goods rose 7.1% on-year and vegetable prices jumped 25.9% amid frequent rains
and heat waves. Core inflation climbed 3.9% on-year in July.
shipyards were awarded with newbuilds of 21.48 mil cgt, down 30% on-year, for the first half of 2022. Korea was awarded
9.94 mil cgt (184 units, 46%), while
China won 9.26 mil cgt (335 units, 43%). Coming in third was Japan with new
orders of 1.54 mil cgt (55 units, 7%). Korea
won 63 of 89 LNG carriers (over 140K cbm each), boasting its excellent
technology in the sector, in Jan-June period.
shipbuilding affiliates of KSOE, HHI, HSHI and HMD secured newbuilding
contracts worth $14.02 bil during Jan-June period, up
9.6% on-year. Read more¡¦
announced on 23rd that it has completed ship launching works for a 300K VLCC, which had been suspended since June 18th against backdrop of a
strike by subcontracted workers, at its No 1 Dock. Vessel will be
delivered after some finishing work and sea trial. DSME's subcontractors
went on a strike on June 2nd demanding pay raise, bonus payment, union activity
guarantee, etc. In particular, from June 22nd, they occupied the work site of
No 1 Dock. Read more¡¦
plans to support financing worth $880 mil for the Swiss Mediterranean Shipping
Company¡¯s green containerships project participating in HHSI. This project is 15,600 teu LNG-powered container ship export
contract worth $1.1 bil ($180 mil per ship, total of 6 ships). Vessels will be
delivered to MSC in 2024. Three global investment banks such as BNP Paribas,
Santander, and CAIXA are to lend funds to MSC, with mid-to long-term export
insurance supported by K-SURE as collateral.
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