South Korea Production Falls as Weak Yen Clouds Export Outlook

South Korea’s industrial production declined in March as the yen’s decline clouds the outlook for the nation’s exports.

Output fell 2.6 percent from February when it slid 0.9 percent, Statistics Korea said today. The median estimate of 11 economists in a Bloomberg News survey was for a 0.9 percent decline. Production fell 3 percent from a year earlier.

Weakness in the yen, which aids export rivals in Japan, is likely to have a bigger impact on South Korea’s economy from this quarter, Bank of Korea director general Kim Young Bae said yesterday. Gross domestic product grew at the fastest pace in two years in the first quarter, gaining 0.9 percent from the previous three months.

The government this month announced a $15 billion extra budget and property stimulus package, while the Bank of Korea left borrowing costs unchanged.

Finance Minister Hyun Oh Seok on April 28 said the government was days away from unveiling policies to spur corporate investment. The government is also preparing measures, including loan and marketing support, to help smaller exporters grappling with the sliding yen, he said.

Japan’s currency dropped about 19 percent against the dollar in the six months through yesterday, compared with the won’s decline of about 1 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: Cynthia Kim in Seoul at ckim170@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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