Hello,

I’m Jae Yoon LEE, Director of the Materials & Sustainability Division at the KIET Center for Growth Engine Industries.

I’ll be discussing the outlook for Korea’s thirteen flagship Industries in 2025.

For 2025, despite intensifying global competition and the rising tide of protectionism, 

we expect Korean exports to maintain their growth momentum, driven by improved domestic and international demand resulting from the spread of AI and expanded investments in IT infrastructure. 

We also anticipate a partial recovery in domestic demand, which had been sluggish throughout 2024.

Overall, we expect the information and communication devices, semiconductors, and bio-health industries to post solid growth in exports, domestic demand, and production. 

On the other hand, growth seems likely to stagnate in the shipbuilding, home appliances, and display industries, 

and the automotive, steel, textile, and battery sectors are not likely to improve upon their 2024 performances. 

But the general machinery, petrochemical, and refinery sectors should gradually bounce back after a rough 2024. 

Now, let's take a more detailed look at the outlook of the thirteen flagship industries through detailed graphs.

First, let’s look at the outlook for exports in the 13 flagship industries in 2025.

In 2025, we project exports from the 13 flagship industries will increase by 2.2% compared to 2024, 

, buoyed by a gradual recovery in global demand following, lower interest rates, and continued growth in IT exports such as semiconductors and information communication devices. 

However, the expansion of overseas production, ongoing stagnation in China, and the base effect of last year’s robust growth temper expectations. 

In the machinery industries, the shipbuilding sector is expected to sustain its export momentum, expanding by 4.1% year over year. 

But increased production overseas and slack demand from China mean that automotive exports are likely to contract by 2.75 percent, while exports of general machinery will remain flat, at just 0.2 growth.

As a result, overall exports in the machinery industries are projected to decrease by 0.8% compared to 2024.

In the materials industries, we expect steel exports to bounce back by 5% and exports of petrochemicals to return to a growth trajectory (albeit at just 0.1%) following a decline in 2024. 

However, falling oil prices mean the value of refined petroleum exports is likely to contract by 7.5%, weighing on overall materials sector exports,

which year over year look set to fall by 1.5% in 2025 compared to 2024, continuing last year’s skid.

Exports in the emerging IT industries, which recorded a substantial 28% increase in 2024 compared to the previous year,

are expected to sustain their growth trend, driven by rising AI demand and improved consumer sentiment fueling greater stronger demand for IT devices. 

We anticipate the export growth to continue in semiconductors (8.5%), information communication devices (8.4%), and biotech (4.9%). 

Overall, we forecast 6.9% growth for IT industry exports in 2025. 

However, stagnant demand for electric vehicles and fierce competition from China will constrain export growth.

Next, we will cover the domestic outlook for Korea’s 13 flagship industries.

Despite strong export performance, we expect continued sluggishness in domestic demand in 2025. 

Despite this, we do anticipate a return to a growth trajectory for most industries in 2025, driven by improved consumer sentiment and the launch of new products.

In the machinery industries, we project higher domestic demand in the general machinery (1.1%) and automotive (3.6%) sectors in 2025. 

This is attributed to expanded investments in the manufacturing sector and sales strategies better tailored to the domestic market.

In the materials industries, domestic demand for petrochemicals (4.2%) is expected to rebound, while demand for refined petroleum products should remain steady amid a recovery in forward industries.

However, we do expect the steel industry to pull back for the second consecutive year, as construction demand as yet to pick back up.

In the emerging IT industries, domestic demand in key IT sectors such as information and communication devices (4.3%) and semiconductors (17.3%) should rebound, driven by strong IT exports and domestic replacement demand. 

Biotech (13.3%) looks set to continue its winning streak, supported by the impact of new drugs. But the forecast for the secondary batteries sector looks grim (-21.8%) again in 2025, as battery electric vehicle production and sales continue to slump. 

Next, let’s look at the production outlook for the thirteen flagship industries in 2025.

In 2025, we expect continued production growth, primarily driven by growth in emerging IT industries that heavily depend on exports.

But production in other sectors looks set to remain flat, and automotive production is likely to fall year over year. 

We expect that greater production in overseas manufacturing facilities will continue to weigh on domestic automotive production, which is set to decline again, this time by 1.5%. 

Production should also fall off somewhat in the shipbuilding (-1.5%) industry, but this is due largely to the base effect.

Production of general machinery (0.2%) should see a slight uptick driven by stronger domestic demand.

In the materials industries, we expect production to fall again in the steel (-0.6%) and textile (-1.0%) industries, reflecting weak domestic and export demand. 

However, production in the petrochemicals (0.8%) industry should return to a growth trend as the oversupply problem eases.

In the emerging IT industries, we anticipate increased production in the information and communication devices (5.6%), semiconductors (11.1%), and biotech (12.7%) sectors, driven by sustained export growth and robust domestic demand. 

However, production in the battery industry is set to contract again in 2025 due to slack domestic and foreign demand, 

though the rate of decline is expected to moderate somewhat, supported by higher battery prices and the expansion of domestic facilities. 

Finally, let’s take a look at the outlook for imports in Korea’s 13 flagship industries in 2025. 

In 2025, we expect imports for the thirteen flagship industries to grow by 3.6% year-on-year.

This increase can be attributed to strong demand for imports in the emerging IT industries, driven by a recovery in domestic demand, as well as sustained imports in the electric vehicle and general materials sectors.

In the machinery industries, we expect higher imports of electric vehicles to drive an overall increase in automotive imports.

General machinery imports are anticipated to continue rising, reflecting growth in the manufacturing sector. 

Similarly, shipbuilding imports are poised to continue their upward trajectory, driven by increased imports from China and the expansion of LNG carrier construction.

In the materials industries, imports of steel, petrochemicals, and textiles are expected to increase year-on-year, driven by higher imports of general-purpose products.

However, growth in terms of volume looks likely to stay flat due to slack domestic demand. 

Meanwhile, imports of refined petroleum products are poised to fall as unit prices slip.

In the emerging IT industries, imports in key IT sectors are expected to continue rising, driven by a recovery in domestic demand, new product launches, and more re-imports. 

We also project higher imports of biotech products. However, imports of secondary batteries are set to fall as domestic demand has yet to pick back up.