September 1, 2012 / 1:40 AM / 7 years ago

UPDATE 1-S.Korea Aug exports fall again as global economy falters

* Aug exports -6.2 pct yr/yr (Reuters poll: -6.3 pct

* Aug imports -9.8 pct yr/yr (Reuters poll: -6.9 pct

* Exports fall for 6th mth this year, imports worst in about 3 yrs

* Case builds for interest rate cut as early as this month

By Choonsik Yoo

SEOUL, Sept 1 (Reuters) - South Korea said on Saturday exports in August set their sixth month of annual decline this year, the first evidence from an industrial powerhouse showing a sustained slump in global demand through the second month of the quarter.

Exports by Asia’s fourth-largest economy fell 6.2 percent in August from a year earlier to $42.97 billion while imports plunged 9.8 percent to $40.93 billion, generating a surplus of $2.04 billion, the Ministry of Knowledge Economy’s data showed.

It was slightly better than a revised 8.8 percent drop in July and in line with a median 6.3 percent decline forecast in a Reuters survey of analysts, but fell far short of providing any sign of the global slump approaching its end.

Demand shrank from almost across the world, with sales to the top market China falling 5.6 percent for the first 20 days of August over a year earlier and those to the European Union down 9.3 percent, ministry data showed.

“Apart from the overall numbers, what’s really annoying is that the economic slowdown has now spread wider to almost all areas including many emerging-market countries,” said Park Sang-hyun, economist at HI Investment & Securities.

“Some talk about a rebound in exports in the near future but I would say the weakness will continue beyond this year.”

In South Korea, the latest figures brought overseas sales for the July-August period down 7.5 percent from a year before, casting doubts on a recent government projection for a modest annual gain in exports for the second half.

August imports now fell for the sixth consecutive month over a year earlier and set the sharpest annual decline in nearly three years, underscoring a sustained weakness in demand within the country for consumption and investment.

For the first 20 days of August, imports of capital goods such as machinery fell 18.2 percent over a year earlier and those of consumer goods dipped 11.6 percent, ministry data showed, underscoring a sustained slump in domestic demand.

The data bodes ill for the economic growth for the current quarter, during which the central bank had forecast gross domestic product would expand by more than 1 percent quarter-on-quarter after a weak 0.4 percent rise in the April-June period.

The Bank of Korea, alarmed by the economic slump continuing for a longer period than expected, cut interest rates in July for the first time since the 2008-2009 global crisis and looks set for another cut as early as this month.

In China, government data showed on Saturday the official factory purchasing managers’ index fell to 49.2 in August, the lowest since November 2011 and a level that indicates the sector’s activity shrank.

China is South Korea’s largest export market, taking about one-quarter of total shipments, followed by the European Union and the United States accounting for about 10 percent each.

South Korea, also the world’s seventh-largest exporter, is home to leading global suppliers of products from smartphones and computer displays to cars and ships, and is the first major economy to report trade figures each month.

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