(Updates with Japan data in eighth paragraph.)
Sept. 30 (Bloomberg) -- South Korea’s industrial production decreased in August from July, in another sign that a global economic slowdown is pressuring Asia’s largest exporting nations.
Output slid 1.9 percent last month from July, when it decreased a revised 0.3 percent, Statistics Korea said today. The median estimate of 10 economists in a Bloomberg News survey was for a 0.3 percent decrease. Production rose 4.8 percent from a year earlier after gaining a revised 4 percent in July.
The report adds to evidence that the European debt crisis and faltering U.S. economic growth are weighing on production in the region, with reports today showing output in Japan increased less than expected and that a gauge of Chinese manufacturing shrank for a third month. A 9 percent weakening in the won against the dollar this month may prove inadequate to support South Korea’s exports, said economist Kong Dong Rak.
“A weak won can help but export and output may lose momentum at any time if the global economy slips into a recession,” Kong, a fixed-income analyst at Taurus Investment & Securities Co. in Seoul, said before the release. “The central bank may want to raise interest rates soon to control inflation but they will likely wait until the dust settles down in Europe.”
The won fell 0.5 percent to 1,179.43 per dollar at 1:21 p.m. in Seoul, according to data compiled by Bloomberg. The currency has declined about 4 percent against the dollar so far this year. The Kospi stock index dropped 1 percent.
South Korean manufacturers’ confidence for October held at a 21-month low while consumer confidence for September stayed at its lowest since March as businesses and people braced for a global economic slowdown, according to central bank reports this week.
The International Monetary Fund lowered its forecast for global economic growth this year to 4 percent from 4.3 percent last week. Its Managing Director Christine Lagarde said the downside risks to global economy are “piling up.”
In a sign that weaker global demand is affecting other markets in the region, a Japanese government report showed that industrial production rose 0.8 percent from the previous month, less than all but three of 28 forecasts in a Bloomberg survey.
Meanwhile, a gauge of Chinese manufacturing shrank for a third month in September, the longest contraction since 2009, according to the purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today.
Bank of Korea
Bank of Korea Governor Kim Choong Soo kept borrowing costs unchanged for a third month on Sept. 8, saying the bank may refrain from resuming rate increases until “external” factors such as Europe’s debt crisis are under control.
LG Display Co., the world’s second-largest maker of liquid- crystal displays, said last month it may cut spending next year as slowing flat-screen television sales damp demand. Growth in vehicle sales at Hyundai Motor Co., the nation’s largest carmaker, slowed to 5.1 percent in August from a year earlier after a 9.2 percent gain in July and a 13 percent increase in June.
South Korea’s leading index of economic indicators rose 2 percent in August from a year earlier, the same as in the previous month, today’s report showed. Sales of consumer goods fell 0.2 percent from July and advanced 5.2 percent from a year earlier.
--With assistance from Sarina Yoo in Seoul. Editors: Ken McCallum, Sunil Jagtiani
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