Korea’s Weakest Export Gain Since ’09 Signals Risks for Asia
South Korea’s exports increased at the slowest pace in two years last month, adding to signs that weaker global demand for Asian products may weigh on the region’s growth.
Overseas shipments rose 9.3 percent in October from a year earlier, the Ministry of Knowledge Economy said in a statement today. The median estimate in a Bloomberg News survey of 12 economists was for a 10.9 percent gain. A separate report today showed that inflation slowed.
The European debt crisis and a faltering global recovery have sapped demand for Asian exports, contributing to an easing in growth in China and and the slowest expansion in Taiwan’s economy in two years last quarter. The Bank of Korea hasn’t raised interest rates since June as supporting growth takes precedence over controlling inflation.
“Inflation is easing while exports are losing momentum at such a rapid pace that the central bank may need to forgo raising interest rates,” said Yoon Yeo Sam, a fixed-income analyst at Daewoo Securities Co. in Seoul. “Even if global leaders find some solutions to the European debt crisis, it will fall short of reviving major economies, which will hit hard Asian exporters, including South Korea.”
The won fell 0.3 percent to 1,113.85 per dollar at 9:52 a.m. in Seoul, according to data compiled by Bloomberg. The benchmark Kospi stock index rose 0.2 percent. The currency has fallen 5.7 percent in the past three months, Asia’s second-worst performer.
Consumer prices rose 3.9 percent from a year earlier, after a 4.3 percent gain in September, Statistics Korea said today in Gwacheon, south of Seoul. That put inflation below the central bank’s target ceiling of 4 percent for the first time this year.
The Bank of Korea kept borrowing costs on hold for a fourth month in October, the longest pause since it started tightening in July 2010. The benchmark interest rate was raised three times this year, to 3.25 percent.
Asia’s fourth-largest economy grew 0.7 percent last quarter from the three months through June, when it expanded 0.9 percent, the central bank said Oct. 27. The Bank of Korea said Oct. 13 that “downside risks” have risen because of Europe’s crisis and signs of sluggishness in developed economies.
Taiwan’s economy expanded 3.37 percent in the third quarter, after rising 5.02 percent in the previous quarter, the statistics bureau said in Taipei yesterday.
There is also rising concern that weaker overseas demand will hurt earnings of the South Korea’s largest exporters. Samsung Electronics Co.’s third-quarter net profit decreased 23 percent from a year earlier as computer-memory chip and panel sales slumped.
LG Electronics Inc. (066570) reported a wider-than-estimated quarterly loss as mobile-phone sales missed forecasts and earnings fell at its flat-panel unit.
South Korea’s factory output rose in September for the first time in three months as overseas shipments of cars and semiconductors withstood the global slowdown, Statistics Korea said yesterday.
The leading index of economic indicators increased 1.5 percent from a year earlier, compared with a 2 percent gain in August. Sales of consumer goods fell 0.2 percent from August and advanced 1.5 percent from a year earlier.
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