Overseas shipments fell 1.8 percent in September from a year earlier, after a 6.2 percent decline in August, the Ministry of Knowledge Economy said in a statement today. The median estimate in a Bloomberg News survey of 12 economists was for a 5.5 percent decline.
South Korean officials are trying to support growth in Asia’s fourth-largest economy ahead of the presidential election in December. Industrial production that fell more than expected in August also bolsters the view that more stimulus is needed even after the central bank cut rates in July and the government provided spending and tax incentives.
“Weaker external demand and a stronger Korean won suggest exports will continue to decline,” Kwon Young Sun, a Hong Kong- based economist at Nomura International Ltd., said before the release. “We believe the Bank of Korea will take this into account when making its policy rate decision.”
South Korea’s won touched an 11-month high of 1,110.55 per dollar on Sept. 28, according to data compiled by Bloomberg. The Kospi stock index rose 0.4 percent.
Imports fell 6.1 percent from a year earlier in September, the ministry said today. That compared with the 9.5 percent decline projected in a Bloomberg survey. The trade surplus was $3.1 billion after a $2 billion excess in August.
The nation’s industrial production fell 0.7 percent in August for the third monthly drop, after it fell 1.9 percent in July, Statistics Korea said on Sept. 28.
Europe’s sovereign debt crisis has clouded the outlook for South Korean companies such as Hyundai Motor Co., the country’s largest carmaker. The Seoul-based firm is holding off on any major expansion in the region, European Chief Operating Officer Allan Rushforth said in an interview last month.
“There is a sustained weakness in demand for Korean goods on both domestic and external fronts,” Ronald Man, a Hong Kong based economist at HSBC Holdings Plc, said before the release. “This is causing firms to push back investment in response to excess capacity. As such, downside risks to overall GDP growth are increasing.”
The International Monetary Fund on Sept. 21 reduced its 2012 growth forecast for South Korea to 3 percent from a June estimate of 3.25 percent. South Korean manufacturers’ confidence fell in October to stay near the lowest level since 2009.
To contact the reporter on this story: Cynthia Kim in Seoul at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Panckhurst at email@example.com