South Korea Exports Expand as Weak Won Offsets Europe Crisis
Overseas shipments rose 1.3 percent from a year earlier, the Ministry of Knowledge Economy said in a statement today, after a revised 0.6 percent decline in May. The median estimate in a Bloomberg News survey of 16 economists was for a 0.5 percent gain.
South Korea announced 8.5 trillion won ($7.4 billion) of economic support measures on June 28 and cut its growth outlook, citing Europe’s “long-term threat” to the nation’s expansion. The Bank of Korea kept borrowing costs unchanged for a 12th month in June and the ministry today cut its estimate for export growth this year.
“South Korean exporters are coping with the European crisis with a weaker currency and by diversifying their products and markets,” Kong Dong Rak, a fixed-income analyst at Taurus Investment & Securities Co. in Seoul, said before the release.
The won has fallen about 6 percent over the past 12 months. It strengthened 0.8 percent to a seven week high of 1,145.40 per dollar on June 29, according to data compiled by Bloomberg, as European leaders made progress in aiding the region’s indebted countries. The Kospi stock index rose 1.9 percent.
Samsung Electronics Co. (005930), the world’s largest handset maker, said on June 25 that the Galaxy S III will help mobile earnings surpass the first-quarter record, after users responded more positively to the latest smartphone model. The company’s mobile unit posted a record first-quarter profit of 4.3 trillion won.
South Korea’s imports fell 5.4 percent in June from a year earlier and the trade surplus for the month was $4.96 billion, today’s data show.
The ministry also cut its estimate for export growth this year to 3.5 percent from a January projection of 6.7 percent, citing a slowdown in major economies. It now expects the value of overseas shipments this year to reach $574.5 billion from a previous estimate of $595 billion.
Imports may increase 5 percent to $551 billion this year, down from a previous forecast for an 8.7 percent gain to $570 billion, the ministry said.
South Korea’s economy expanded at the fastest pace in a year during the first quarter, boosted by government spending and investments by semiconductor chipmakers. Still, the government on June 28 cut its forecast for this year’s growth to 3.3 percent from 3.7 percent projected in December.
Shipments to the European Union fell 22.7 percent from a year earlier in the first 20 days of June, according to today’s report. Exports to China, the biggest buyer of South Korean goods, were little changed from a year ago while exports to members of the Association of Southeast Asian Nations, or ASEAN, rose 13.9 percent.
Sales to the U.S. and Japan dropped 3.5 percent and 3.6 percent, respectively. Data for exports to individual countries are only available for the first 20 days of the month.
Overseas shipments of semiconductors rose 3.1 percent last month while car sales gained 1.5 percent, the ministry said.
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