WRAPUP 1-S.Korea sees sharper slowdown as exports tumble

* South Korean November exports slump 18.3 percent

* Slowdown faster than expected, government official warns

* Inflation hits 7-month low, bonds surge on rate cut hopes

By Cheon Jong-woo and Seo Eun-kyung

SEOUL, Dec 1 (Reuters) - South Korean exports suffered their biggest drop in seven years, prompting a warning from a government that the economy was slowing faster than expected and piling pressure on the central bank for more interest rate cuts.

Analysts said that as the global downturn cuts into exports that have long underpinned growth in Asia's fourth largest economy, the authorities had no choice but to focus on sagging domestic demand for some economic support.

"The speed of the economic slowdown is faster than expected. The economy is seen recovering in the second half of the next year ... but the speed is likely to be very slow if the situation remains tough," a finance ministry official told Reuters, asking not to be identified.

The official was speaking after the government announced that November exports plunged 18.3 percent from a year earlier, much more than expected.

Analysts painted an even bleaker picture.

"The figures showed the country's economy is going down the tubes rapidly and indicated overall Asian exports are shrinking very quickly. Next year, South Korean exports are expected to post a fall, probably up to 30 percent." said Oh Suk-tae, an economist at Citigroup.

"The Bank of Korea will cut interest rates next week further, but a 25 basis point cut will not be enough. I expect the BOK to slash rates to 3 percent in the next six months."

Government bond futures KTBc1 surged after the export data, lifted by expectations of more rate cuts on top of 125 basis points of easing over the past two months.

The central bank holds its next monthly rate meeting on Dec. 11.

Imports fell 14.6 percent due to sliding raw material prices, also more than expected, but not enough to improve the deteriorating trade balance.

South Korea reported a $13.3 billion trade shortfall during the first 11 months of the year, putting the country on course for its first yearly deficit since 1997, when it was hit by the Asian financial crisis.

"It is inevitable for the annual trade deficit to exceed $10 billion," Chung Jae-hoon, director general for trade at the ministry, told reporters.