South Korea’s government said yesterday its exports would weaken and trade surplus dwindle this year as global trade shrinks amid prolonged economic woes in Europe and the US.
The South Korean Ministry of Knowledge Economy said the country recorded an annual trade surplus of US$33.3 billion last year as total exports rose nearly 20 percent to reach US$557.8 billion.
However, the surplus will shrink to US$25 billion for this year as exports slow on weaker demand from major markets, while the value of imports will increase on rising oil prices, it said.
“The momentum for global growth is weakening due to the aftermath of global fiscal crisis, and it is hard to predict the direction of global oil prices and foreign exchange rates,” the ministry said in a statement.
“Trade growth will slow down on increased uncertainty in global economy,” it said.
Exports of Asia’s fourth-largest economy will grow at a slower pace of 6.7 percent this year to reach US$595 billion, while imports will rise 8.7 percent to US$570 billion, it said.
Sluggish global demand will particularly deal a blow to the country’s major shipbuilders, steelmakers, refineries and mobile gadget makers, it said. South Korea’s export-dependent economy is feeling the squeeze from the reverberations of the eurozone debt crisis and shaky US economy.
On Saturday, the parliament passed a revised version of the government’s budget for this year, which now calls for 325.4 trillion won (US$282.5 billion) in spending during an election year.
The new budget, smaller than the 326.1 trillion won sought by the finance ministry, expands targeted social welfare programs and tax-credit programs to encourage job growth.
Legislators from both the ruling and main opposition parties had called for more welfare spending in the run-up to a parliamentary election in April and a presidential poll in December.
South Korean Prime Minister Kim Hwang-sik said after the budget was passed that economic uncertainties would remain high this year and the government would closely monitor conditions and respond as necessary.
The finance ministry has cut its growth forecast for the -export-dominated economy for this year to 3.7 percent from 4.5 percent, amid the eurozone debt crisis and the slowdown in developed nations.