Fri, May 02, 2008 - Page 11 News List

S Korea sets fifth straight trade deficit as prices rise

AP , SEOUL

Members of the Korean Confederation of Trade Unions shout slogans during an anti-government rally to mark May Day in Seoul, South Korea, yesterday.

PHOTO: AP

South Korea recorded a trade deficit for the fifth straight month last month, though the shortfall sharply narrowed on exports of petrochemicals and other products, the government said yesterday.

Meanwhile, other official data showed that consumer prices rose.

The deficit stood at US$46 million last month compared with a revised US$820 million shortfall in March, the Ministry of Knowledge Economy said in a statement.

Exports of petrochemical products, ships and machinery helped shrink the deficit despite spiraling oil prices, the ministry said.

Exports rose last month by 27 percent year on year to US$38.02 billion.

Imports increased by 28.6 percent to US$38.06 billion.

In a separate report, the National Statistical Office said South Korea’s consumer price index rose 4.1 percent last month from the same month last year.

The figure remained higher than the central bank’s target inflation band of 2.5 percent to 3.5 percent for a fifth consecutive month.

Expectations in a Dow Jones Newswires poll were for an average 3.9 percent increase in prices.

The price index rose 0.6 percent month on month, higher than expectations of a 0.4 percent gain. In March, the index had gained 0.9 percent over February.

South Korea’s vice strategy and finance minister said earlier that the government’s economic growth target of 6 percent this year remains intact.

“The situation [surrounding the local economy] both overseas and at home seems difficult,” Vice Minister of Strategy and Finance Choi Joong-kyung said yesterday in a radio interview. “But the [GDP] target of 6 percent is still valid.”

Choi spoke before the release of yesterday’s data.

South Korea’s economy grew 5 percent last year. President Lee Myung-bak, a former construction industry chief executive and Seoul mayor, took office in February vowing to boost the economy through deregulation and by encouraging foreign investment.

The Bank of Korea kept its benchmark interest rate on hold at 5 percent on April 9 at its most recent policy meeting.

The central bank governor, however, conceded for the first time that South Korea’s economy may suffer from a slowdown in global growth, and hinted that the bank may lower its policy rate in the near term in response.

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