South Korea Exports Rise Less Than Estimated on Weaker YenEunkyung Seo and Cynthia Kim
South Korean exports rose less than forecast last month as improving global demand for the country’s electronics and cars was tempered by a weaker yen.
Overseas shipments rose 0.4 percent in March from a year earlier, after an 8.6 percent drop in February, the Ministry of Trade, Industry and Energy said today. The median estimate in a Bloomberg News survey of 11 economists was for a 1.8 percent gain. Consumer prices rose 1.3 percent last month from a year ago, according to a Statistics Korea report.
Today’s data suggest that the won’s strength against the yen may be outweighing the benefits of a global economic pickup and the South Korean currency’s weakness against the dollar. President Park Geun Hye’s government pledged to enact new stimulus measures after cutting the 2013 growth forecast to 2.3 percent last week, a revision that may put pressure on the Bank of Korea to lower its benchmark interest rate as well.
“The central bank may feel under government pressure for a rate cut as early as next week as a further weakening of the yen should hurt South Korean exports while domestic demand stays sluggish,” said Park Sang Hyun, a Seoul-based economist at Hi Investment and Securities Co.,. “A combination of fiscal stimulus and monetary easing should help the economy get out of the trough much faster.”
Imports fell 2 percent from a year earlier in March, the ministry said today. The trade surplus widened to $3.4 billion from $2 billion in February.
The South Korean currency gained about 21 percent against the yen in the past six months, according to data compiled by Bloomberg. The economy expanded last year at the slowest pace since 2009.
South Korean companies have complained that the weakening Japanese yen is blunting their competitiveness. The Federation of Korean Industries, the nation’s largest business lobby group, said in February that with Haruhiko Kuroda leading the Bank of Japan, the yen will probably decline further.
“Exports will likely recover by a greater degree in the second half as the global economic and trade conditions improve,” Lee Woon Ho, director-general for trade at the Ministry of Trade, Industry and Energy, told reporters in Gwacheon today. “The weak yen is hurting some sectors, especially cars and steel, but the won-dollar rate is becoming more favorable to us.”
The won has declined 4.6 percent against the dollar since Jan. 1.
Samsung Electronics Co. said in January that currency gains could reduce its operating profit by 3 trillion won ($2.8 billion) this year. Kia Motors Corp. reported a 51 percent slump in operating profit for the fourth quarter of 2012, saying a difficult year is expected with a strengthening won.
The won fell 0.4 percent to 1,115.80 to the dollar as of 12:53 p.m. in Seoul today. The benchmark Kospi index fell 0.4 percent to 1,996.93.