General

The Korean economy was hit hard by the global supply chain crisis last year. The government has introduced a number of policies to stabilize the supply chain, which have achieved certain results. However, since the beginning of this year, the global supply chain situation has not seen a fundamental improvement. In addition, the outbreak of the conflict between Russia and Ukraine has made the South Korean economy face a severe test again. In particular, the recent general strike in the South Korean freight industry has brought huge losses to the South Korean industry and aggravated the supply chain crisis. impact on the economy.

The "Cargo Joint Headquarters" of the South Korean Freight Union has implemented an indefinite strike since June 7. The organization represents the interests of South Korean large truck drivers. The purpose of the strike is to increase freight rates in the face of skyrocketing international oil prices, and to extend the time limit for the "safe transportation system" introduced by former President Moon Jae-in's administration to protect the rights and interests of truck drivers and set minimum freight charges. The South Korean government and companies initially refused to extend the system on the grounds of increasing costs, but due to the huge damage to the Korean economy due to the strike, they finally made concessions on extending the "safe transportation system", and freight drivers also officially returned to work on June 15. post.

However, the after-effects of the Korean freight driver strike on the Korean economy have not been completely eliminated. During the strike, the production of automobiles, steel, cement and other industries almost came to a standstill. According to statistics from the Ministry of Trade, Industry and Energy, from June 7 to June 12, the production, shipment and export losses of major industries such as automobiles, steel, petrochemicals, and cement in South Korea reached 1.5868 trillion won. Affected by the strike, South Korea's exports in June rose only 5.4% year-on-year, the first single-digit growth in South Korea's exports in nearly 16 months.

In this strike, Korean automakers have been hit the hardest. On the one hand, the necessary parts and components for the production of the whole vehicle cannot be delivered normally, and on the other hand, the produced vehicle has nowhere to park because it cannot be shipped out. At Hyundai Motor's Ulsan plant alone, the average daily production capacity has dropped by more than 300 units, and the overall production has been reduced by more than 2,000 units.

At the same time, South Korean car companies are also constrained by insufficient supply of automotive semiconductors. At present, South Korea's popular hybrid cars and new energy vehicles generally have to wait 12 to 18 months after booking to pick up the car. Affected by the strike of freight drivers in June and the possible strike of the auto workers' union in August, the demand The driving time may be further extended.

Affected by the internal worries of the supply chain, the domestic sales of five Korean car companies in June were only more than 120,000 vehicles, a year-on-year decrease of 10.1%. In the first half of the year, domestic sales were only 668,900 units, the lowest level since 2009.

With the combined influence of unfavorable factors such as the global supply chain crisis and rising raw material prices, some Korean companies are entering a downward trend in their performance this year. According to data recently released by the financial information company FNGuide, among the 182 South Korean listed companies that released their annual operating profit market forecasts in early January this year, 109 of them lowered their relevant profit figures, accounting for 59.9%. The analysis believes that the soaring raw material prices and supply chain turmoil caused by the conflict between Russia and Ukraine have led to the shrinking of economic activities such as production, consumption, and investment, which ultimately led to this result. Faced with the uncertainty of the operating environment and cost pressures, Korean companies are drastically reducing equipment investment. According to the Bank of Korea (Central Bank), South Korea's equipment investment in the first quarter of this year decreased by 3.9% from the previous quarter. This is the lowest value in three years since the quarter-on-quarter decline of 8.3% in the first quarter of 2019.

Although global supply chain problems and rising oil prices have made semiconductor, aviation, shipping, oil refining and other industries enjoy "super prosperity", and their performance has increased significantly, most experts believe that the global supply chain crisis, rising raw material prices, and logistics obstruction "triple" The effects of suffering” are not limited to specific industries. Some people pointed out that if memory semiconductor companies such as Samsung Electronics and SK Hynix experience shrinking demand for mobile phones and servers, they cannot guarantee their performance in the second half of the year.

In addition, the depreciation of the Korean won against the US dollar will not be beneficial to exporting companies. Usually, if the Korean won depreciates, the export price competitiveness of Korean companies will increase, which will lead to the growth of Korean exports. However, this dividend is offset by the cost burden brought about by skyrocketing raw material prices in the international market. In addition, South Korean companies have successively established production bases overseas, so the effect of the depreciation of the won is not as obvious as in the past. South Korea's low export growth in June is the best proof.

In response to the current difficult situation, the South Korean government has decided to increase the scale of trade loans to small and medium-sized key export enterprises this year from the original 261.3 trillion won to 301.3 trillion won; And cultivate new export products such as environmental protection, high-tech materials and parts and equipment; improve the working hour system to alleviate the shortage of manpower in export enterprises; improve the visa system to attract more foreign laborers.