(Repeats for screen clients)
* S.Korea Dec industrial output beats expectations
* S.Korea 2014 c/a surplus at record $70.73 bln -c.bank
* Firm fundamentals seen as support for S.Korea against
By Christine Kim and Se Young Lee
SEOUL, Jan 29 South Korea's industrial output
surged in December and its current account surplus grew to a
record last year, suggesting Asia's fourth-largest economy
carried strong momentum into 2014 with sufficient buffers to
weather the latest global markets turmoil.
The step up in industrial activity also reinforces an
improving outlook for overseas shipments for the export-reliant
economy, home to some of the world's biggest manufacturers of
cars, ships and smartphones.
"The (industrial output) numbers have exceeded our
estimates, which indicates the economic stimulation from the
previous second and third quarters were effective, as well as
reaffirming the strong fundamentals of South Korea compared to
other emerging markets," said IBK Securities economist Na
Overseas shipments, which are expected to grow 6.4 percent
this year from a modest 2.1 percent rise in 2013, heavily
influence the country's current account balance and industrial
On Wednesday, Statistics Korea said that industrial output
grew by a seasonally adjusted 3.4 percent in December from the
previous month, the biggest gain since June 2009, and topped the
most optimistic forecast of 2.5 percent in a Reuters survey of
Separately, data released by the Bank of Korea showed the
country ran a record current account surplus of $70.73 billion
South Korea's strong external balance, spurred by growing
demand for its exports in its biggest markets of China and the
United States, places the economy in good shape to weather the
kind of turmoil seen in emerging markets in the past week.
The country has also continued to reduce its short-term
external debt and built up its foreign currency reserves in a
bid to bolster its defences against external shocks.
In a move that helped shore up riskier currencies and calm
emerging markets, Turkey's central bank more than doubled some
of its key rates. The forceful defence of the
lira, which had plunged in recent sessions, also pushed the won
up more than 1 percent against the dollar in early trade
With growth picking up speed, many economists expect a
brighter outlook for South Korea over the year.
"This (data) suggests the economy remains on track to post
stronger growth in 2014," said Ronald Man, economist at HSBC.
REASONS FOR CAUTION
The Bank of Korea expects gross domestic product growth to
pick up to 3.8 percent in 2014, led by rising exports, from 2.8
percent in 2013.
Still, some analysts say there are plenty of reasons to
remain cautious, highlighting risks to the global economy as the
U.S. Federal Reserve continues to cut back its stimulus and
tighter credit conditions in China threatening to slow its
Domestic consumption has also failed to show any notable
growth, as most Koreans save up to pay off their debt rather
than spend on cars and homes.
Analysts and policymakers also remain concerned about the
Japanese yen's future trajectory, with Tokyo expected to
remain committed to its massive easing campaign to reinflate the
Further depreciation of the yen would undercut local
exporters' price competitiveness against Japanese rivals, with
major local manufacturers like Samsung Electronics Co.
and Hyundai Motor Co. already pointing
to the won's relative strength as a factor in their weak
"Variables like the uncertain direction of currency rates
and downward adjustments of corporate earnings are reasons not
to be too sanguine about this year's growth outlook," said IBK
The median forecast from a Reuters survey of economists tips
the country's overseas shipments to fall by an annual 0.2
percent this month, though that would be distorted by the fewer
working days due to the Lunar New Year holidays.
The Reuters survey also tipped January's annual consumer
inflation at 1.1 percent, holding steady from December. With
domestic demand running soft and cautious local companies
holding back from spending, inflation has held well below the
central bank's target band of 2.5 percent to 3.5 percent.
The Bank of Korea is widely expected to start raising
interest rates later this year from the current 2.50 percent
, assuming that growth continues to recover and
price pressures begin to build.
"In the absence of a threat like a significant slowdown in
China, exports should recover in line with the recovery in
advanced markets and boost domestic demand," said Hyundai
Securities economist Lee Sang-jae, adding that the central
bank's 2014 growth projection is well within reach.
(Additional reporting by Jungmin Jang; Editing by Shri