The country’s exports reached a record high of $605 billion  in 2018, up 5.5 percent from a year earlier, according to data released by the Ministry of Trade, Industry and Energy on the first day of the New Year. This achievement has made South Korea the world’s seventh economy to surpass the $600 billion mark in outbound shipments, following the US, Germany, China, Japan, the Netherlands and France.

It was no small feat, and with almost all economic indicators pointing downward recently, President Moon Jae-in’s economic team might have wanted to play it up.

Looming larger, however, are concerns that the country’s exports may be slumping sharply this year, rattling its slowing economy that is suffering from sluggish consumption and a simultaneous decline in production and investment.

The Korea Institute for Industrial Economics and Trade, a state-run think tank, recently forecast the nation’s exports would increase 3.7 percent on-year to $633 billion in 2019. More cautious experts predict that the growth would slip into contraction territory as the weakening competitiveness of the country’s key manufacturing industries is coupled with deteriorating external conditions.

In December, exports decreased 1.2 percent from a year earlier after the increase decelerated from 22.6 percent in October to 4.1 percent in November.

Outbound shipments of 10 of the country’s 13 major export items shrank last month. The on-year decrease reached 33.7 percent for wireless telecom equipment, 16.9 percent for computers, 11.7 percent for home appliances, 8 percent for textiles and 6.1 percent for petrochemical products.

Most worrisome was the fall in the shipments of semiconductors, which account for more than one-fifth of the country’s total exports. Semiconductor exports fell 8.3 percent on-year in December, marking the first reduction in 27 months. The fall reinforces signals that the boom in global demand for memory chips is coming to an end.

Local manufacturing exporters might take a harder hit from aggravating conditions abroad this year.

Slowing demand in China, the largest market for their goods, reduced South Korea’s shipments to the world’s second-largest economy 13.9 percent in December, following a 2.7 percent decrease in November, which marked the first monthly decline since October 2016.

A possible rekindling of the trade war between the US and China, coupled with the possibility of Brexit with no deal, would slow the global economic growth. Continued US rate hikes would destabilize financial markets in emerging economies, decreasing their demands for goods from South Korea.

A slump in exports, which account for 68 percent of the country’s gross domestic product, could have a crippling effect on its faltering economy.

Asia’s fourth-largest economy is forecast to grow around 2.5 percent this year, down from the 2.7 percent estimated for last year.

Over the past year, the country has seen its factory activity drop to the weakest level in two decades, with facility investment shrining for six consecutive months through August. The on-year increase in the number of employees remained around 100,000, far below the target of 320,000, pushing up the unemployment rate to the highest level in 18 years.

Regulatory reforms needed to forge new growth engines have been stalled as the Moon government has done little to overcome objections from many ruling party lawmakers as well as interest groups.

There should be a sense of crisis that, under these worsening conditions, a possible slump in exports could push the economy over the cliff.

The Moon government should ditch its economic policy framework of putting tighter restrictions on businesses and seeking to boost growth with pro-labor measures supported by fiscal spending.

But Moon and his aides still seem to be adhering to their misguided policies that have dampened corporate activities and aggravated the livelihoods of low-income households. This stance would make it impossible to push for comprehensive and effective industrial policies needed to accelerate the restructuring of the manufacturing sector and the development of new industries.

To overcome the darkening prospects of exports, the country needs to step up efforts to expand its foothold in new promising markets outside major destinations for its goods. It is necessary to strengthen support to enable more small and medium-sized companies to ship more products abroad.

Policymakers should also stay alert to avoid the country being left behind in the global moves to realign multilateral trade blocs amid intensifying protectionism triggered by US President Donald Trump’s administration.