South Korean exports in December rose less than expected, data showed yesterday, and the government forecast overseas sales this year would slow on weakening demand from the United States.
The slowing exports mean Asia's fourth-largest economy will have to rely more on domestic demand for growth, and this will make it more difficult for the central bank to raise interest rates even as inflation gathers pace, analysts said.
The Commerce Ministry said exports in December rose 15.5 percent from a year earlier, which came below market expectations for a 16.6 percent annual rise in a Reuters poll. Imports grew 24.0 percent, above expectations for a 17.2 percent gain.
Exports in all of 2007 rose 14.2 percent, faster than the ministry's target of 12.8 percent growth, but growth in sales abroad would drop to 11.6 percent in 2008 because of a slowing US economy, the ministry said in a statement.
"Exports in the new year should slow down from 2007. A slower US economy should hurt in the first half, although solid exports to the emerging markets such as China are expected to keep the growth rate at two digits," said Park Sang-hyun, chief economist at CJ Investment and Securities.
The ministry said faster import growth in December, a result of firmer oil prices, sent the trade balance into a $0.87 billion deficit, the first monthly deficit since March 2003.
Stock prices fell and the won pared its earlier gains against the dollar on the trade figures, although treasury bond futures prices dipped as bond investors shrugged off the data.
Commerce Ministry figures for the first 20 days of December showed exports to the United States dropped 0.8 percent from a year earlier while shipments to Europe jumped 35.5 percent.
Source: China Daily/Agencies
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