Korea’s export structure is changing as food prices soar

Rising prices, can you feel it?

Shall we take a look at the current economic situation in Korea? These days, the price of goods has risen a lot around the world, and worry of each country is getting bigger. The same is true in Korea. Do foreign residents realize this?

Until last year, if you went to a restaurant, you could have a meal for around 8,000 won. There have been many restaurants that have suddenly risen to 10,000 won this year. You can also feel that prices have risen when you buy food ingredients.

Looking at specific figures, Korea's consumer price index increased by 4.2% in March compared to the previous year. By item, vegetable prices increased by 13.8% and processed foods by 9.1%, showing a particularly high rate of increase in food prices.

According to the Korea Consumer Agency's survey on the prices of 8 major restaurant products in Seoul, including jajangmyeon, kimchi stew, and bibimbap, they rose by an average of 10.4% from a year ago.

Other countries also suffer from inflation

Globally, international sugar prices are said to have risen to the highest level in 12 years. The price of raw sugar, the raw material of sugar, rose 30% in four months. The reason why sugar prices are soaring is because production has decreased due to climate change.

In particular, the world's sugar-producing countries are struggling. India has been restricting sugar exports for two years due to unusually high temperatures and heavy rains. In Brazil, production decreased due to extreme drought last year, but barely recovered, and Thailand also saw a decrease in sugar production due to bad weather.

In addition, the price of flour and cooking oil also rose, and the consumer price of processed foods, including bread and snacks, soared 9.1% in one month. Compared to the 4.2% increase in the overall consumer price index, it more than doubled.

South Korea's largest export country has changed

In this situation, Korea's largest export country has recently changed from China to the United States. The amount exported to the United States ($3.045 billion) exceeded the amount exported to China ($2.666 billion). This happened for the first time in 20 years, and as exports to China decreased, Korea's trade deficit also increased significantly.

Some say that Korea's export structure has changed dramatically, but exports are so important that Korea relies on exports for half of its economy. Among them, we made a living by exporting to China, but this turned upside down.

China has been producing and exporting various products to the extent that it is said to be the world's factory. In the meantime, it has been buying materials and parts (intermediate goods) from Korea, processing them, and exporting them.

However, through long-term technology development, China has been able to make it on its own without buying intermediate goods from Korea.

So, Korea is making efforts to change its trade structure from China-centered exports to other countries in ASEAN, such as Vietnam.

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