S.Korea Dec exports disappoint, rate cuts loom
Reuters - Friday, January 2
By Yoo Choonsik
SEOUL, Jan 2 - South Korean exports and imports shrank more than expected in December over a year earlier, figures on the customs office's website showed on Friday, adding to the case for further interest rate cuts.
Exports by Asia's fourth-largest economy fell 17.4 percent to $27.29 billion in December from a year earlier, while imports dropped 21.5 percent to $26.62 billion, the figures on the Korea Customs Service's website showed.
The sharper decline in imports than exports helped the country post a trade surplus of $0.67 billion in the last month of 2008, the figures showed.
The data appeared on the website hours before the Ministry of Knowledge Economy was due to officially release figures for December at 0100 GMT on Friday.
Economists surveyed by Reuters had forecast South Korean exports in December would fall a median 16.4 percent over a year earlier and imports by 19.1 percent. [ID:nSEO292369]
South Korea sends more than one-fifth of total exports to its giant neighbour China, but more than half of them are finished and re-exported to the global markets including the United States, officials have said.
The bleak trade data came after the head of the country's central bank pledged on Wednesday to manage its interest rate policy in 2009 toward supporting economic recovery and helping financial markets achieve stability. [ID:nSEO337127]
The Bank of Korea slashed the policy interest rate by a total of 2.25 percentage points over the past two months to a record low of 3.0 percent to boost domestic demand, and investors and analysts are betting on further reductions ahead.
The central bank next reviews the rate on Jan. 9.
The Bank of Korea forecast South Korea's economy, led by exports of electronics, cars and ships, would see growth slumping to 2 percent in 2009 from an estimated 3.6 percent in 2008 due to slowing demand both at home and from abroad.
But several global investment banks, such as UBS, have warned the economy would probably shrink by as much as 3 percent in 2009, which would mark the first annual contraction since the Asian financial crisis a decade ago.
The website put exports in all of 2008 at $422.42 billion and imports at $435.41 billion, which left the country's trade balance for the whole year at a deficit of $13.01 billion.
It did not provide figures for December alone, but the customs office had already released export and import figures for the first 11 months of 2008 in the middle of December.
It is the biggest annual trade deficit in 12 years since South Korea recorded a shortfall of $20.6 billion in 1996.
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