Extract B states: 'Analysts warned that the latest figures supported the consensus that the downturn in South Korea's trade-dependent economy would persist...'

Using the data in the extracts and your knowledge of economics, evaluate policies which could be used to boost South Korea's exports and improve its balance of trade.

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Extract B: Navigating headwinds in South Korea's high-tech battery and electronics export sector

Although GDP growth in South Korea is projected to be around 1.4% in 2024, this remains significantly below its long-term historical trend, leaving the economy operating with a persistent negative output gap. Recently, overall exports contracted for a ninth consecutive month, and core consumer prices have slowed their growth dramatically. Commentators are increasingly questioning whether the country's reliance on high-tech manufacturing exports is hitting structural limits in an era of rising global protectionism.

Data from the Ministry of Trade, Industry and Energy showed that exports in November plummeted by 12.4% compared to the previous year. Analysts warned that the latest figures supported the consensus that the downturn in South Korea's trade-dependent economy would persist into next year. This has intensified pressure on the Bank of Korea to consider further monetary easing. The central bank recently cut its base interest rate from 3.50% to 3.25%, the first reduction in several years, in response to cooling global demand and escalating tariff barriers. However, policymakers remain optimistic that South Korea's leadership in high-tech green energy manufacturing will prevent a prolonged structural economic slowdown.

South Korea is a dominant global supplier of rechargeable lithium-ion batteries, electric vehicles (EVs), and advanced display panels. However, its trade balance has been squeezed by supply chain disruptions and volatile raw material prices. Because battery production relies heavily on imported critical minerals such as lithium, cobalt, and nickel, South Korea's import bill has surged, narrowing its trade surplus and occasionally pushing the current account into deficit. Furthermore, geopolitical rivalries and the restructuring of regional supply networks have complicated access to key consumer markets, while high interest rates in major Western economies continue to depress global consumer spending on big-ticket technology items.