(Updates with trade forecasts in 10th paragraph)
Oct. 1 (Bloomberg) -- South Korea’s exports expanded at the slowest pace in three months in September, in a sign the stalling global economy is sapping demand for the nation’s products.
Exports climbed 19.6 percent from a year earlier, compared with a revised 25.9 percent gain in August, the Ministry of Knowledge Economy said today. The median estimate in a Bloomberg News survey of 11 economists was for a 16.6 percent gain.
Policy makers are weighing the risk that a slowdown in demand from the faltering U.S. and European economies will outweigh increased export competitiveness following a more than 4 percent decline in the won against the dollar this year. South Korea is also struggling to contain inflation, which surged to a three-year high of 5.3 percent in August.
“Exporters can enjoy the benefit from a falling won to some extent but global demand is the key issue,” Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul, said before the release. “The Bank of Korea appears to be really cautious over any rate move.”
The won fell 0.4 percent to 1,178.10 per dollar in Seoul yesterday, according to data compiled by Bloomberg. The currency slid 9.4 percent this quarter, its steepest slump since the three months ended September 2008. The Kospi Index rose 0.36, or less than 0.1 percent, to 1,769.65 yesterday. The equities benchmark declined 16 percent in the quarter, its biggest drop since the last three months of 2008.
The nation’s economy will grow at an annual pace of about mid-4 percent from 2011 to 2015, the finance ministry said on Sept. 27. The IMF cut its forecast for South Korea’s 2011 GDP growth to 4 percent from 4.5 percent on Sept. 20. The economy grew 3.4 percent from a year earlier in the second quarter, the slowest pace in seven quarters.
Exports rose to $47.1 billion from $45.9 billion in August, today’s report showed. Imports climbed 30.5 percent to $45.7 billion. The trade surplus was $1.4 billion.
Shipments to Europe rose 11.2 percent from a year earlier in the first 20 days of September, the ministry said today. Shipments to China, the biggest buyer of South Korean goods, increased 20.5 percent. Exports to the U.S. rose 15.9 percent. Data for exports to individual countries are only available for the first 20 days of the month.
Exports of semiconductors fell 4.2 percent last month while oil product exports surged 56.8 percent, the ministry said. Shipments of vessels fell 32.7 percent while vehicle exports gained 40 percent.
South Korea’s trade surplus may not widen in the fourth quarter because exports are expected to slow as global economies slump, while the value of imports will probably rise due to high oil prices, the ministry said.
Two of three exporters said they may not meet their targets this year, citing weakening demand in major markets and currency volatility, according to a Korea Chamber of Commerce and Industry survey of 500 companies, released on Sept. 30.
--With assistance from Sarina Yoo in Seoul. Editors: Jim McDonald, Paul Tighe
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