South Korean Economy’s Dependence on Japan Decreasing

South Korea’s dependence on imports from Japan has fallen.

The Korea Chamber of Commerce and Industry (KCCI) announced on July 26 that South Korean industries’ dependence on imports from Japan fell from 9.8 percent at the end of Q1, 2019 to 9 percent at the end of that year. During the period, however, their dependence on the materials and components subject to Japan’s export curbs that started a year ago edged up from 15.7 percent to 16 percent.

Last year, South Korea’s imports totaled US$503.3 billion and those from Japan stood at US$47.6 billion. The ratio, approximately 9.5 percent, fell below 10 percent for the first time since records began in 1965.

The export curbs’ direct impact on South Korean companies has been rather limited. The KCCI recently conducted a survey with 302 companies doing business with Japan and 84 percent and 91 percent of the respondents said that the export curbs have caused no damage and have had little impact on their competitiveness, respectively.

In addition, 85 percent of the respondents answered that the South Korean government has responded well to the export curbs. Specifically, 42 percent, 23 percent and 18 percent mentioned R&D support, supply network stabilization and deregulation as the most helpful measures, respectively. “Although the limited impact is welcome news, the trade retaliation is still going on and, as such, potential risks should be examined and more countermeasures should be prepared,” the KCCI advised.