South Korea Expects Europe Debt Crisis to Slow Exports This Year
South Korea forecast a rapid slowing of exports this year as Europe’s debt crisis threatens the global economy. The government said shipments increased more than economists expected in December.
Export growth will probably slow to 6.7 percent this year, from 19.6 percent in 2011, the Ministry of Knowledge Economy said today in a statement. Overseas shipments (KOEXTOTY) rose 12.5 percent last month compared with a year earlier, it also said. The median estimate in a Bloomberg News survey of 11 economists was for a 6.3 percent gain in December.
Europe’s debt crisis is cutting export demand and North Korea’s leadership change threatens confidence by adding to the risk of instability on the Korean peninsula. The economy faces “substantial” downside risks, the Bank of Korea said on Dec. 29, pledging to focus policy efforts on stable prices and “sound” growth.
“Worries over a quicker slowdown are rising,” Lee Sang Jae, a senior economist at Hyundai Securities Co. in Seoul, said before the release. The central bank may keep interest rates on hold as it grapples with “a slowing economy and persistent inflation pressures,” he said.
The won rose 0.3 percent to 1,151.82 per dollar in Seoul on Dec. 29, according to data compiled by Bloomberg. The benchmark Kospi stock index gained 0.03 percent. South Korean financial markets were closed on Dec. 30.
Export value rose to $49.7 billion last month from $46.5 billion in November, today’s report showed. Imports climbed 14 percent to $45.7 billion, and the nation recorded a trade surplus of $4 billion.
Asia’s fourth-largest economy expects exports to increase to $595 billion in 2012, yielding a trade surplus of $25 billion, the ministry said today.
To contact the reporters on this story: Eunkyung Seo in Seoul at firstname.lastname@example.org
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