GCC exports to Korea top $98bn
Kuwait, September 2, 2013
The GCC led by regional giant Saudi Arabia is the world's largest exporter to South Korea delivering goods worth over $98 billion in the 12 months prior to July 2013, said a report.
The trade comprised nearly 20 per cent of South Korea’s total imports, its highest share since the 1979 oil crisis, according to Asiya Investments, an Asia-focused investment company based in Kuwait.
Nearly half of Korea’s energy use is in the form of petroleum, making the GCC the biggest exporter. Korea’s energy consumption levels have increased over time and, given that its production capacity is relatively low and rigid, its energy imports have been rising, the report stated.
Among the GCC countries, Saudi is the largest exporter and fifth at the global level. The Kingdom shipped $37.5 billion worth of goods in the 12 months to July 2013, followed by Qatar with $26 billion, Kuwait with $18.4 billion and the UAE with $16.2 billion.
Kuwait became South Korea’s third largest exporter from the GCC in 2011, said the Asiya Investments report.
According to Korea National Oil Corporation (Kano), Kuwait exported to South Korea 518,000 barrels per day in July, about a fifth of its July oil production and also fifth of South Korea’s total oil imports.
In terms of value, Kuwait’s July exports to South Korea increased the most, by 45.1 per cent year on year (YoY), followed closely by the UAE at 44.8 per cent year-on-year, the report stated.
While Saudi Arabia’s exports to Korea only grew 1.2 per cent YoY, Qatar’s declined by 16.1 per cent, it added.
"South Korea is growing below its potential level, because its industrial and consumer sectors are suffering due to the country’s large exposure to the US, EU and Japan (the G3). It is through this channel that the GCC’s trade sector can be most affected, rather than through direct links to developed economies," explained Camille Accad, the economist at Asiya Investments.
"The same applies to China, Taiwan and other countries in the region. The GCC exports nearly twice as much to emerging Asia than it does to the G3. Less developed Asian economies, such as Vietnam and Cambodia, are also increasing their demand for the Gulf’s energy products, as they develop their industrial sectors, while the G3 is reducing its imports from the GCC, as their industries stall and as they become more energy self-sufficient," she noted.
"Nonetheless, Asian demand for GCC’s energy products will remain robust as the regional industrial expansion continues in spite of the weak economic background," noted Accad.
Korea, she pointed out, was an important economic partner to the Gulf and a certain level of competition exists among GCC countries to increase their share of exports. However, the GCC should adopt a strategy of diversification, she stated.
"About a third of South Korea’s energy consumption comes from coal (being the world’s largest producer, China is the main supplier) and another third comes from nuclear and natural gas," remarked Accad.
"South Korea is the world’s second largest importer of liquefied natural gas, and its demand is rising fast, benefiting Qatar. The UAE is already diversifying away from energy into trade, finance and tourism," she said.
Now Kuwait too needs to diversify its energy exports to profit from Korean demand, said the expert.
"Kuwait has a large quantity of proved natural gas reserves, the 18th biggest in the world, but produces very little. The economic center of the world is shifting East, and the Gulf’s oil producers should get prepared to cater for Asian needs if they want to get a piece of that pie," she added.-TradeArabia News Service