S Korea export slump eases in Feb, but outlook grim
Monday, 2 March 2009
SEOUL, March 1 (Reuters): South Korean exports in February sank 17.1 per cent, half as much as their drop in January, but overseas sales are expected to keep falling as consumers and companies cut spending amid a worsening global economy.
South Korea is home to the world's leading producers of computer chips, mobile phones and ships and is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand.
"As more countries are suffering from the recession, it is difficult to say that exports has hit a bottom yet. Exports are likely to continue falling around 30 per cent until the end of the first half," said Ryu Seung-sun, an economist at HMC Investment Securities.
"Exports may improve in the second half, possibly posting small growth in the fourth quarter, but that is simply a hope rather than an expectation," he added.
The trade data will likely reinforce expectations that South Korea's central bank will cut interest rates at its March 12 policy meeting to help bolster domestic demand and cushion slumping exports.
Since October, the Bank of Korea has slashed rates a total of 3.25 per centage points to a record low of 2.00 per cent.
February exports from Asia's fourth-largest economy slid 17.1 per cent from a year ago, slightly better than market forecasts, after dropping a revised 33.8 per cent in January, according to the customs agency's website.
The weaker won likely boosted exports last month to some degree despite weak demand. The won has lost around 17 per cent of its value against the U.S. dollar so far this year, after a 25.4 per cent decline in 2008.
But analysts said the apparent improvement in the export trend was largely because the Lunar New Year holidays fell in January this year while the holidays were in February in 2008, adding exports were likely to drop further in coming months.
South Korea is home to the world's leading producers of computer chips, mobile phones and ships and is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand.
"As more countries are suffering from the recession, it is difficult to say that exports has hit a bottom yet. Exports are likely to continue falling around 30 per cent until the end of the first half," said Ryu Seung-sun, an economist at HMC Investment Securities.
"Exports may improve in the second half, possibly posting small growth in the fourth quarter, but that is simply a hope rather than an expectation," he added.
The trade data will likely reinforce expectations that South Korea's central bank will cut interest rates at its March 12 policy meeting to help bolster domestic demand and cushion slumping exports.
Since October, the Bank of Korea has slashed rates a total of 3.25 per centage points to a record low of 2.00 per cent.
February exports from Asia's fourth-largest economy slid 17.1 per cent from a year ago, slightly better than market forecasts, after dropping a revised 33.8 per cent in January, according to the customs agency's website.
The weaker won likely boosted exports last month to some degree despite weak demand. The won has lost around 17 per cent of its value against the U.S. dollar so far this year, after a 25.4 per cent decline in 2008.
But analysts said the apparent improvement in the export trend was largely because the Lunar New Year holidays fell in January this year while the holidays were in February in 2008, adding exports were likely to drop further in coming months.