(Updates with economist quote in fourth paragraph.)
Aug. 31 (Bloomberg) -- South Korea’s industrial production expanded at the slowest pace in 10 months as weakness in global growth threatens the outlook for exports.
Output rose 3.8 percent from a year earlier after gaining a revised 6.5 percent in June, Statistics Korea said today. The median estimate of 11 economists in a Bloomberg News survey was for a 6.2 percent gain. Production slid 0.4 percent from June, when it increased 0.9 percent.
Finance Minister Bahk Jae Wan indicated this week that a cut in the government’s growth forecast may be looming as “downside risks” grow. The Bank of Korea left interest rates unchanged for a second month on Aug. 11 to gauge risks to the global recovery after equity markets plunged.
“This is not a good sign that the economy may be cooling down much faster than expected,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “Now, it all depends on how well exports can hold up in August and coming months to support the economy.”
The won fell 0.1 percent to 1,072.88 per dollar as of 10:57 a.m. in Seoul, according to data compiled by Bloomberg. The currency has strengthened about 5 percent against the dollar so far this year, the third best performer among major Asian currencies. The Kospi stock index is almost unchanged today.
Industrial activity is expected to pick up from August as the weather improves and government spending increases, Bahk said today. He said Aug. 29 that the government is maintaining a 4.5 percent growth estimate "for now."
Investment in factories fell 2.7 percent in July from a year earlier after rising a revised 4.7 percent in June, while shipments increased 3 percent, slowing from a revised 5.8 percent in June, according to the report.
Samsung Electronics Co., the world’s largest maker of televisions and flat-screen panels, reported an 18 percent drop in second-quarter profit. Slumping sales for TVs and displays will continue in the third quarter as a slow economic recovery damps consumer appetite for electronics products, it said.
South Korea’s leading index of economic indicators rose 2.0 percent in July from a year earlier, compared with a 1.7 percent gain in June, today’s report showed. Sales of consumer goods gained 2.3 percent from June and advanced 5.3 percent from a year earlier.
--With assistance from Sarina Yoo and Jiyeun Lee in Seoul. Editors: Ken McCallum, Nerys Avery
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