(News Focus) Global economic slump bites into S. Korean exports

By Lee Joon-seung
SEOUL, Dec. 1 (Yonhap) -- The worldwide economic slump triggered by the U.S.
financial crisis is causing South Korea's exports to contract much faster than
previously anticipated, which can adversely affect the country's economic
recovery efforts, trade experts said Monday.
The 18.3 percent on-year drop in exports in November is the worst monthly showing
since December 2001, when the "information technology bubble" burst in advanced
industrial economies and South Korean exports plunged 20.4 percent, a report by
the Ministry of Knowledge Economy said.
Total exports from the world's 11th-largest trading nation reached $29.26
billion, while imports gained 14.5 percent year-on-year to end at $28.96 billion
for a monthly surplus of US$297 million.
Last month's tally showed exports of 13 main manufactured products, with the
exception of ships, dropping into negative territory as compared to the same
period last year.
Consumer electronics, computers and semiconductors posted the sharpest drop by
nose-diving 40-50 percent on-year, with mobile communication equipment, general
machinery, petrochemicals and auto parts all declining 20-30 percent.
Experts said that the plunge is raising concerns as such developments may
continue into the first half of next year.
External trade has been key to South Korea's economic success and has been the
single most important factor in maintaining growth in the past few years.
The government said if exports reach $500 billion and full economic stimulus
programs are implemented, the country may pull off 4 percent growth in 2009.
"The government had not expected such a sharp drop in exports, which has been
triggered in part by many importers cutting back on orders to shield themselves
from risks in the face of the widespread liquidity crunch," said Chung Jae-hoon,
head of the ministry's trade and investment bureau.
He said that because foreign buyers were first moving to sell inventory instead
of buying new products, the country's export growth may continue to do poorly in
the near future.
"There is a growing number of cases of foreign buyers delaying and even canceling
orders," the trade official said. He added that because of such unforeseen
developments, there is no way to gauge export gains for this month or the early
months of next year.
Others in the ministry and private sector said measures by many foreign lenders
to regulate loans and provide financing is sapping demand.
Hyundai and Kia motor companies claimed that the sudden curtailment of financing
is preventing U.S. consumers from buying fuel-efficient smaller-sized models.
Compared to U.S. and Japanese carmakers, which tend to make bigger cars and that
were hit hardest by the recent downturn, local companies have done well selling
sub-compacts in the U.S., the world's single largest auto market.
On predictions for next year, government policymakers said they are still
striving to pull off double-digit growth, despite rising skepticism from private
researchers who said the country will be hard pressed just to stay in positive
territory during the first half.
"Minus export growth is highly likely since South Korea's exports grew at a fast
pace earlier this year," Yoon Sang-ha, a researcher at the LG Economic Research
Institute, said.
Others said that while exports to the U.S. have fallen a modest 6.2 percent,
figures for developing economies like China, which buy 70 percent of the
country's exports, are a source of concern down the road.
Negative 27.8 percent growth in exports to China, the country's largest buyer of
local goods, does not bode well for immediate exports.
A trade expert at the Korea International Trade Association said that with 75
percent of local exports to China going to South Korean and multinational
companies that assemble components for non-Chinese markets, the global slump will
continue to hurt shipments to that country.
The government, meanwhile, said that while conditions are bleak, South Korea may
actually be able to expand its market share in key areas.
Kang Myung-soo, head of the Knowledge Ministry export import division, said the
global market share for such products as South Korean-made ships and mobile
communication equipment are rising as rivals are feeling greater pressure.
"Some exporters in the components sector said that with many rivals on the brink
of collapse, next year could allow healthy South Korean companies to make headway
in the global market," he said.
Others said that with the export of industrial plants to oil-rich Middle East
countries to post solid gains for at least two to three years, local companies
could make gains into these untapped markets.
Seoul also said that the country may be able to revert to a trade surplus next
year after witnessing its deficit skyrocket to $13.34 billion in the first 11
months of this year. The surplus is expected because a drop in imports may
surpass the decline in exports.
yonngong@yna.co.kr
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