(News Focus) S. Korean export growth to fall off sharply in 2009: experts

By Lee Joon-seung
SEOUL, Nov. 4 (Yonhap) -- The expected downturn in global fortunes in 2009 may
cause South Korea's export growth to fall off sharply and undermine the
government's efforts to revive the sluggish economy, government and private
sector experts said Tuesday.
Senior policymakers said they will make all-out efforts in the new year to
maintain double-digit growth, but conceded that it may be an uphill struggle if
fallout from the U.S. financial crisis begins to hurt consumer spending,
production and investment.
After exporting US$371 billion worth of goods in 2007, South Korea's outbound
shipment reached $367 billion in the first 10 months of this year for an annual
gain of 21.3 percent, which is unlikely to be repeated in the new year.
The government has not released growth estimates, but private think tanks are
forecasting exports to increase less than 9 percent compared to this year.
The Institute for International Trade under the Korea International Trade
Association predicted export growth to increase 8.6 percent on-year, while
numbers from the Samsung Economic Research Institute (SERI) and LG Economic
Research Institute (LGERI) were 8.3 and 8.9 percent, respectively.
SERI and LGERI said exports may reach $484 billion and $486 billion from an
estimate of around $447 billion this year. The total is lower than the
government's export target of $500 billion.
The think tanks said the U.S. financial crisis will likely exert negative
influence on consumer purchasing power, industrial production and housing in
advanced Western economies, leading to reduced growth in countries like Japan and
China, which rely on those markets to buy their products.
The International Monetary Fund said that the global economy may grow 3 percent
in 2009, while Washington is forecasting growth of 2.2 percent for the U.S. next
year.
Related to growing concerns about a drop in demand, a report by the Ministry of
Knowledge Economy showed Monday that export growth to China and the European
Union (EU) fell into negative territory in the first 20 days of October, with
numbers for other regions all losing steam. Exports to China contracted 1.8
percent on-year, while those for the EU were down 8.2 percent.
The findings then said exports to the U.S. and Japan were also down significantly
compared to same period in 2007 and from September.
"Every effort will be made to pull off double-digit growth in the new year, but
overall conditions are not going to be favorable," Knowledge Economy Minister Lee
Youn-ho said. He added that financial troubles are now slowly spilling into other
areas.
"It can be assumed that real difficulties are starting to materialize, with firm
resolve by all economic actors needed to handle such developments," he said.
The senior policymaker said that smaller-sized firms will feel the pinch the most.
Experts at the ministry in charge of trade, meanwhile, said that circumstances
will be hard in the first half of 2009, particularly since an average 20 percent
growth was maintained in the six months of this year.
"Seoul expects exports will continue to grow, although not at a faster pace
compared to recent years," a source who declined to be identified said.
He then said that the rosiest estimates indicate that exports may start picking
up steam in the latter part of next year.
South Korea, which grew 5 percent last year, is expected to dip to the mid-4
percent range in 2008 and then fall to 3-4 percent levels in the new year.
yonngong@yna.co.kr
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