S. Korea`s export growth to drop sharply in 2009: think tanks

(ATTN: UPDATES with more detail in paras 2, 5, 12; ADDS with comments by official in paras 3-4; TRIMS)
By Lee Joon-seung
SEOUL, Nov. 27 (Yonhap) -- A slowdown in the global economy is expected to cause South Korea to post single-digit export growth in 2009, the government and local think tanks said Thursday.
Senior policymakers and experts from leading economic institutes said at an
economy and trade inspection meeting in Seoul that outbound shipment growth will
likely drop below 9 percent, down sharply from an expected annual gain of around
18 percent for this year.
Knowledge Economy Minister Lee Youn-ho said local companies were reporting
cancellation of export orders amid volatile exchange rates and difficulty in
acquiring trade financing.
"This is a sign that exports that have posted solid gains so far this year may
experience trouble down the road," the official said. He added such developments
could be hard on small- and medium- sized enterprises.
Echoing this view, the state-run Korea Institute for Industrial Economics and
Trade (KIET) said export gains may move up a mere 4.7 percent year-on-year, while
the Institute for International Trade (IIT) said an 8.6 percent gain is possible.
Other private think tanks like the SK Research Institute for SUPEX Management
claimed exports could contract 2.7 percent from 2008 in the new year.
KIET President Oh Sang-bong said foreign and domestic constraints will be key
factors in weaker export gains, and called on the government to support export
financing.
The economist predicted that exports may reach $456.8 billion, shy of the $500
billion target set by Seoul earlier in the month. Meanwhile, imports may gain 1.7
percent to $456.0 billion for a modest surplus of US$800 million in the one-year
period.
Lee Kyung-tae, IIT's president, also said the country could post a surplus after
the expected deficit for this year. From January through October, the country's
deficit ballooned to $13.6 billion.
He said that exports may hit $477.8 billion, with imports reaching $474.6 billion
for a surplus of $3.2 billion.
"Exports to advanced industrial countries, China, ASEAN and Eastern Europe are
all expected to fall off in the near future, although weak domestic demand will
affect imports as well," the expert said.
He predicted, however, that demand for industrial plants and other
infrastructure-related work may help exports to the Middle East, Latin America
and Africa that have earned considerable profits due to high energy prices this
year.
The majority of think tanks at the gathering said a trade surplus may be possible
in 2009, with exports increasing by 3 to 8 percent compared with this year. The
highest growth prediction was made by the Korea Economic Research Institute that
forecast growth of 12.8 percent.
On energy prices, Lee Won-woo, vice president at Korea Energy Economic Institute
(KEEI), said crude oil, LNG, coal and uranium prices are all expected to dip in
2009 compared to this year.
The energy specialist said oil prices could reach an average of $66.60 per barrel
in the new year, down 30 percent from around $95.10 projected for this year. LNG,
coal and uranium could all fall 20-50 percent on-year as sluggish economic growth
saps demand.
Research institutes, meanwhile, said economic growth will not reach 4 percent as
targeted by the government, but more likely hover in the 3 percent range,
although SK Research Institute for SUPEX Management said the GDP growth may drop
to 2.0 percent.
This prediction is the lowest forwarded by any local economic research institute,
and is below the 2.7 percent gain forecast by the Organization for Economic
Cooperation and Development.
South Korea's economy grew 5 percent in 2007 and may pull off 4 percent growth
this year.
yonngong@yna.co.kr
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