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S. Korea exports fall at record pace in January
Source: Agencies |
February 2, 2009, Monday
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SOUTH Korean exports in January shrank by a record pace as global downturn deepened, putting pressure on the government and central bank to take stronger steps to shore up Asia's fourth-largest economy.
South Korea is home to the world's leading producers of computer chips, mobile phones and ships and is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand.
Japan, China and a number of other export-reliant Asian economies have also reported a collapse in exports in recent months, with the technology industry hit especially hard, as consumer demand buckles in the United States and Europe.
The Ministry of Knowledge Economy said today exports in January fell 32.8 percent over a year earlier, worse than analysts had expected, while imports sagged 32.1 percent as consumers cut spending amid a deepening global recession.
The data reinforced expectations that South Korea's central bank will cut interest rates for the sixth time in four months at its February 12 policy meeting to help boost domestic demand and cushion cooling demand from abroad.
"Exports will inevitably fall by double-digit rates throughout the first half as the global economy is unlikely to show a fast recovery," said Kim Jae-eun, an economist at Hana Daetoo Securities.
"With the export data and other recent indicators, the Bank of Korea is more likely to cut its key interest rate by 50 basis points, rather than 25."
The Bank of Korea has since early October more than halved its base rate to a record low of 2.5 percent.
Financial markets showed a muted reaction to the ministry's figures because they matched data that the country's customs agency posted on its Website (http://www.customs.go.kr) yesterday.
For the first 20 days of January, South Korean exports to China fell 32.2 percent from a year earlier, those to the United States by 21.5 percent and those to the European Union markets by 46.9 percent, the ministry said.
Exports totaled US$21.69 billion in January while imports stood at US$24.66 billion, producing a trade deficit of US$2.97 billion, compared with a revised US$540 million trade surplus in December 2008, the ministry said.
It said electronics, automobiles and petrochemical products led the export decline in January by posting annual declines of 40 percent or more for the first 20 days of the month.
South Korea is home to the world's leading producers of computer chips, mobile phones and ships and is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand.
Japan, China and a number of other export-reliant Asian economies have also reported a collapse in exports in recent months, with the technology industry hit especially hard, as consumer demand buckles in the United States and Europe.
The Ministry of Knowledge Economy said today exports in January fell 32.8 percent over a year earlier, worse than analysts had expected, while imports sagged 32.1 percent as consumers cut spending amid a deepening global recession.
The data reinforced expectations that South Korea's central bank will cut interest rates for the sixth time in four months at its February 12 policy meeting to help boost domestic demand and cushion cooling demand from abroad.
"Exports will inevitably fall by double-digit rates throughout the first half as the global economy is unlikely to show a fast recovery," said Kim Jae-eun, an economist at Hana Daetoo Securities.
"With the export data and other recent indicators, the Bank of Korea is more likely to cut its key interest rate by 50 basis points, rather than 25."
The Bank of Korea has since early October more than halved its base rate to a record low of 2.5 percent.
Financial markets showed a muted reaction to the ministry's figures because they matched data that the country's customs agency posted on its Website (http://www.customs.go.kr) yesterday.
For the first 20 days of January, South Korean exports to China fell 32.2 percent from a year earlier, those to the United States by 21.5 percent and those to the European Union markets by 46.9 percent, the ministry said.
Exports totaled US$21.69 billion in January while imports stood at US$24.66 billion, producing a trade deficit of US$2.97 billion, compared with a revised US$540 million trade surplus in December 2008, the ministry said.
It said electronics, automobiles and petrochemical products led the export decline in January by posting annual declines of 40 percent or more for the first 20 days of the month.
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