Korea set to overtake Japan as No. 5 exporter by 2026

South Korea is set to overtake Japan and become the world’s No. 5 export powerhouse by 2026 on grounds that the country will maintain its current export growth rate while Japan's downtrend will continue, according to the Federation of Korean Industries (FKI) on Dec. 3.

Last year, Japan's exports reached $705.5 billion while Korea posted $541.8 billion with a 2.9% share of the global export market. The difference between the two countries' exports stands at $163.7 billion.

Korea is likely to surpass Japan in five to six years if it maintains the 1.68% yearly average growth in exports seen in the 2011-2019 period, the FKI said in a report.  

During the same period, Japan posted an average export decline of 0.96%.

This year, Korea's exports fared well compared to other advanced countries despite concerns that exports may weaken due to the COVID-19 crisis.

According to the International Monetary Fund (IMF), the global trade volume in the first half of the year dropped by 12.9% compared to the same period last year. Exports fell by 13.5% and imports tumbled by 12.4%.

Considering that the top 20 export countries recorded an average decline of 14.2%, Korea has defended well with its exports falling only 11.3%, less than the global average.

“Asia, Korea’s largest export market, was less affected by the global pandemic,” the FKI said.

Another positive factor is that Korea’s export growth is bullish in new-growth industries such as electric vehicles and displays. Korea saw its exports jump by 37.9% in 2019 versus 2015 in 14 new-growth industries selected by the Korea International Trade Association.

The FKI has requested the Korean government commit to aggressive trade policies, including joining the Trans-Pacific Strategic Economic Partnership (TPP), especially since US President-elect Joe Biden’s administration is expected to return to the TPP.

“If Korea and the US both join the TPP, then the current account will increase by $26.6 billion,” said Kim Bong-man, secretary-general at FKI's international cooperation division.

Korea became the No. 20 export country in the world when it posted $10 billion in exports in 1977. Since then, the country has seen an average of 9.96% annual export growth over 42 years.    

Write to Jung-soo Hwang at hjs@hankyung.com
Danbee Lee edited this article.