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South Korean Nov exports to China set record drop
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South Korean Nov exports to China set record drop
Reuters - 27 minutes ago
By Yoo Choonsik
SEOUL, Dec 17 - South Korean exports to its biggest trading partner, China, posted their sharpest fall on record in November from a year ago and U.S.-bound shipments also tumbled, raising fears of a prolonged slowdown in Asia's fourth-largest economy.
Shipments to China fell 32.9 percent in November from a year earlier, the fastest annual fall since South Korea began compiling such data in early 1992, figures from the Korea Customs Service showed on Wednesday.
South Korean government officials and analysts estimate over half of the country's exports to China, such as semi-finished components, are used to complete Chinese products before being re-exported to global markets, especially the United States.
Economists said the data showed how quickly the global economy was cooling and that the falling trend could continue for the time being despite a recent global wave of monetary easing.
"It will take some more time before we start to see the monetary policy easing in many countries take effect," said Park Sang-hyun, an economist at HI Investment & Securities.
"Exports are very important for Korea because the local economy has become more dependent than before on exports."
The value of exports in won terms amounted to 57 percent of South Korea's gross domestic product for the first nine months of this year, increasing from 46 percent in all of last year amid a deepening slump in domestic demand, central bank figures show.
It was the second consecutive month of annual decline in South Korean exports to China, which takes more than one-fifth of its smaller neighbour's total exports, after a 2.6 percent contraction in October.
South Korean exports to its second-biggest market, the United States, declined 14.1 percent in November from a year earlier, the sharpest fall since a 16.1 percent drop in September 2007.
WEAKER WON MAY HELP
The figures came after economists and international organisations warned of a dramatic turn for the worse in global trade and economic growth in the aftermath of the U.S. financial crisis.
The head of the International Monetary Fund warned this week that it could cut its forecast for China's 2009 economic growth to around 5 percent from an already downgraded 8.5 percent set in November. [ID:nLF40653]
A World Bank economist said last week world trade had suffered a rapid dive as the global economic slowdown cuts into consumer demand and the cost of trade finance has shot up. [ID:nN11387383]
South Korea's central bank forecast last week the country would see annual economic growth sink to an 11-year low of 2.0 percent next year as exports quickly lose steam and a persistent slump in domestic demand deepens.
Economists said the weaker won <KRW=>, which has fallen more than a quarter against the dollar this year to become one of the region's top losers, could help South Korean exporters, but only when global demand takes off on a recovery.
As global demand keeps slackening, government-run Korea Export Insurance Corporation said on Wednesday it would expand its financial support to local exporters to 170 trillion won next year from 130 trillion this year.
South Korea first reported provisional foreign trade figures for November on Dec. 1 but released a break-down by country for the month for the first time on Wednesday.
The customs agency also revised down the country's trade surplus for November to $0.14 billion from a provisional $0.30 billion first reported on Dec. 1, as the value of exports was adjusted downward more than imports.
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