South Korea’s exports fell for a second month as Europe’s debt crisis and gains in the won damped demand.
Overseas shipments fell 6.2 percent last month from a year earlier, after an 8.8 percent decline in July, the Korean Ministry of Knowledge Economy said in a statement yesterday. The median estimate in a Bloomberg survey of 15 economists was for a 6.8 percent decline.
Europe’s debt crisis, a US jobless rate stuck above 8 percent and a slowdown in China are damping demand for Asian exports.
The Bank of Korea may lower its economic growth forecast for this year next month and the government will probably unveil more stimulus measures to help counter weaker overseas sales, according to Nomura Holdings Inc.
“We expect Korea’s exports to remain subdued in the third quarter as the won has been appreciating while external demand, especially from Europe and emerging economies, remains weak,” Kwon Young-sun, a Hong Kong-based economist at Nomura, said before the release.
“The near-term growth outlook doesn’t look good,” he said.
He estimates the central bank will lower its forecast for this year’s economic expansion to 2.7 percent from 3 percent and says there is an increasing risk of an interest-rate cut this month.
The won gained about 4 percent over the past three months, the best performer among the 11 most-used Asian currencies. It fell 0.05 percent to 1,134.63 per dollar in Seoul on Friday, according to data compiled by Bloomberg.
Imports dropped 9.8 percent from a year earlier last month, the ministry said yesterday. That compared with the 7.6 percent projected decline in a Bloomberg survey. The trade surplus was US$2.04 billion after a US$2.76 billion excess in July.
Asia’s fourth-largest economy expanded 2.4 percent in the second quarter from a year earlier, the slowest pace in almost three years, according to a preliminary estimate by the central bank on July 26. Exports account for about half of the economy.
Industrial output fell 1.6 percent in July from the previous month, Statistics Korea said on Friday, the second monthly drop.
Posco, Asia’s third-biggest steelmaker, is among South Korean companies facing weakness in demand.
The second half “will be worse than expected early this year because of weak demand from construction and shipbuilders,” chief financial officer Park Ki-hong told investors in Seoul in July.
Moody’s Investors Service this week raised South Korea’s sovereign debt rating to a par with Japan and China, citing the nation’s fiscal and economic strength.
“Korea’s strong fiscal fundamentals enable a relatively large degree of policy space to cope with contingent domestic risks and external shocks,” Moody’s said on Monday. The company elevated South Korea one step to “Aa3,” the fourth-highest ranking.