South Korea’s industrial production suffered a surprise fall last month as a global economic downturn curbed demand for electronics and other key products, official data showed yesterday.
Output declined 0.4 percent from the previous month, after a 0.6 percent fall in October, Statistics Korea, a government agency reported. On a year-on-year basis, production growth fell from 6.3 percent in October to 5.6 percent, the government said.
The export--dependent economy is feeling the squeeze from the reverberations of the eurozone debt crisis, the shaky US economy and supply chain disruptions caused by months of flooding in Thailand.
The data indicated South Korea’s economy is heading for a “soft landing,” HSBC economists wrote in a research note, predicting a quarter-point cut in the official interest rate to 3 percent in the first quarter of next year.
The government earlier this month slashed its economic growth forecast for next year from 4.5 percent to 3.7 percent, saying slowing global demand was hurting exports and domestic consumption.
A separate economic report showed the country’s current account surplus hit a 13-month high last month thanks to robust exports despite growing fears of a global slowdown, the central bank said yesterday.
The surplus in the account, the broadest measure of international trade, was US$5.05 billion last month compared to a revised US$4.13 billion in October.
That was the highest surplus since US$5.49 billion in October last year. The current account remained in surplus for the 21st straight month, suggesting the country’s fundamentals remain sound despite economic turbulence in Europe and the US.
The total goods account registered a surplus of US$4.49 billion last month, up from a surplus of US$3.55 billion in October, thanks to strong overseas sales of petrochemical products and automobiles.
The service account, which includes spending by South Koreans on overseas trips, saw a surplus of US$357 million last month, up from US$2.8 million in October.
The primary income account, which records wages for foreign workers and dividend payments overseas, recorded a surplus of US$446 million last month, down from US$644 million in October.