Korean businesses are experiencing the double-trouble of dwindling foreign shipments and declining export profitability, the Bank of Korea said.
The nation's exports have fallen for 10 consecutive months this year, and the export price index, an indicator of export prices, hit its lowest level last month in 28 years and 10 months. That means domestic exporters are getting lower prices for the same products than in the past, the central bank said.
On the other hand, domestic consumption has sharply increased recently, thanks to excise tax cuts and the Korean version of Black Friday, aggravating the imbalance between foreign and domestic sales, the report said.
"The productivity increase in electronics and semiconductor sectors has pulled down their prices to 10 percent of the level of 1990," said Kim Min-soo, a BOK director responsible for price statistics, while explaining the reasons for lowered export prices. "Global oil prices, which nearly halved from last year, also served to reduce the export prices of petrochemical goods."
In contrast to struggling exports, domestic consumption sharply increased, as seen by motor vehicle sales growth of 22.7 percent in October and the 17.4 percent rise in department stores' monthly turnover.
"Such an imbalance will even aggravate in months to come, as the government will plunge its scalpel of industrial manufacturing into troubled steelmakers and shipbuilders, two of the nation's main export industries," the report said.