S. Korea's trade surplus hits record US$6 bln in April

(ATTN: UPDATES with more details, comments in paras 4, 12, 15-17)
By Lee Joon-seung
SEOUL, May 1 (Yonhap) -- South Korea's trade surplus reached a record US$6
billion in April mainly due to a sharp drop in imports and favorable exchange
rates, a government report showed Friday.

The country's exports reached $30.6 billion last month, falling 19.0 percent
on-year, with imports plummeting 35.6 percent to $24.6 billion, according to the
Ministry of Knowledge Economy.
The monthly surplus surpassed the previous record of just under $4.3 billion
tallied for March, and is much higher than the $3.8 billion reported for April
1998 when the country was struggling to cope with the Asian financial crisis by
cutting back on spending.
For the first four months of this year, South Korea's exports reached $105.4
billion, with imports totaling $95.8 billion for a surplus of $9.5 billion. The
ministry said ship sales soared 39.9 percent annually, with liquid crystal
display exports moving up 2.3 percent.
Steady sales of ships have been the leading source of the country's trade surplus
this year.
Outbound shipments for petrochemicals, steel, semiconductors, mobile
communication devices and consumer electronics fell short of numbers reached the
year before, but the extent of the shortfall decreased vis-a-vis March, according
to the ministry.
Semiconductors, which are a major export item for South Korea, posted a
contraction of 26 percent on-year from a 38 percent drop posted the month before.
The ministry said the exchange rate, which stood at an average of 1,336 won to
the U.S. dollar last month, made locally made products cheaper abroad. In 2008,
the average exchange rate was 1,103 won to the greenback.
A drop in international raw materials prices continued to reduce purchasing
outlays for crude oil, natural gas and steel, eating into import figures.
Import prices for crude oil were down 51 percent annually, with steel and gas
prices posting 49 percent negative growth.
"Despite the drop in volume, last month's trade report card shows promise with
exports surpassing the $30 billion mark for the first time since October, with
the daily average exceeding 1.2 billion for the first time in five months," said
Lee Dong-geun, deputy minister of trade and investment promotion.
Lee also said the $2.6 billion increase in exports compared to the previous month
is a good sign, although it is premature to say that exports are on the mend.
The official said that size of the surplus was unexpected, as Seoul originally
predicted it would be $4.8 to $5.0 billion in the black.
"Companies fearing that all trade would be halted in early May due to the many
holidays probably pushed forward shipments," Lee said.
For May, the trade expert said the size of the surplus should fall to the $4.0 to
$5.0 billion level, with export growth to remain in negative territory of around
20 percent.
Lee, however, expressed concerns that the size of the surplus is mainly the
result of companies cutting back on imports, including facility upgrades-related
purchasing and those for parts and components.
"The gap between exports and imports is far greater than what is good for the
economy and in particular, the 30.6 percent on-year drop in overseas capital
goods purchasing could limit export growth down the road," he said, stressing
that Seoul did not seek an excessively large surplus and wanted to see balanced
growth in both exports and imports.
The provisional tally taken for the first 20 days of the month, meanwhile, showed
exports to Oceania gaining 110.3 percent year-on-year, with numbers for the
European Union falling 1.0 percent.
Exports to the United States, China and Japan were down 19 to 34 percent annually
during the cited month as the economic crisis dampened consumer demand and
business investments.
The ministry added that while it is carefully monitoring the economic effects of
a new type-A flu virus that is spreading around the globe, local companies have
so far remained unaffected.
yonngong@yna.co.kr
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