South Korean exports to suffer downturn next year: official says

South Korean exports to suffer downturn next year: official says
Qatar News Agency
Article Date: 09:24 2008/10/22

Seoul, October 22 (QNA) - The sluggish global economy is expected to cause a downturn in South Korean exports in the first half of 2009, a senior government policymaker said Wednesday. Knowledge Economy Minister Lee Youn-ho told a gathering of local businessmen in Seoul that the financial crisis, which was set off by the U.S. sub-prime mortgage rout and the collapse of Lehman Brothers Inc., is affecting growth worldwide. "Such developments are likely to affect exports, investment and local spending," he said in a statement carried by the South Korean /Yonhap/ News agency today. South Korea's exports posted solid double-digit gains throughout the year, with numbers topping $37.59 billion for an annual gain of 28.2 percent in September. Imports surged 45.8 percent that month to $39.65 billion for a deficit of $2.05 billion. The official said that the scale of the fallout will depend upon economic conditions in the United States and developing countries such as China. Developing economies account for over 60 percent of South Korean exports, while exports to the U.S. make up roughly 10 percent of the total. "The liquidity crunch being felt at present may lead to higher interest rates, which in turn will hurt corporate investment," Lee said. The minister said instability in the financial sector could also have negative consequences on foreign exchange rates. The policymaker stressed, however, that the country will be able to pull off a trade surplus in October and for the whole of the fourth quarter. He said the government is aiming to attract at least 12 billion in foreign direct investment by year's end. Reflecting the general slowdown, Seoul said that this year''s growth may dip to mid-4-percent levels from the 5 percent seen in 2007, with some experts predicting growth to fall to under 4 percent in the first half of next year.(qna) MD

Commentary: I would love to see full follow through and tracking on those Korean exports to developing economies which may indirectly represent value added exports to the USA? How much of those volumes are inter-Korean subsidiary traffic? Much of what is happening globally at this time appears to mirror what was happening in Korea in 1997. Which industries will demonstrate earliest signs of contraction? Will construction and ship-building be drastically affected and what kinds of bailout packages has the Korean government prepared in the event of possible chaebol melt-downs in 2009? In addition what methods will the Korean government be promoting to encourage 12 billion in FDI in the next two months?