South Korea's January Exports Top Forecasts
South Korean exports in January grew past market expectations on rebounding prices abroad for major products and despite worries about a sharper-than-expected deceleration in the U.S. economy, data showed on Thursday.
Exports by Asia's third-largest economy jumped 21.4% in January over a year earlier, outpacing the median forecast for 20.9% growth in a Reuters poll and accelerating from a 13.8% rise in December 2006, the commerce ministry said.
Economists said the recovery in global electronics and automobile demand amid a resilient U.S. economy would keep the outlook rosy for South Korean exports, although softening demand from China remained a cause of concern.
"The upside for this year is that the U.S economy is showing steady signs of recovery. The downside is that it will be hard for South Korea to greatly increase export volumes to China," said Goh You Sun, an economist at Daewoo Securities.
"Electronics, autos and steel industries look strong for 2007, but it is hard to tell for petrochem because oil prices are volatile," she added. Financial markets showed a muted reaction, with investors paying more attention to global markets after the Federal Reserve held U.S. interest rates steady overnight, although stock prices slightly extended gains.
The ministry warned against the won's recent rise to a nine-year high against the yen, saying the stronger currency could hurt industries by eroding profitability as well as weakening competitiveness against rival Japanese companies.
Imports rose 21.5% in January from the year-earlier period, also beating 18.3% growth forecast in the poll, led by purchases of foreign machinery and production equipment for expansion of plants at home, it said in a statement.
Exports of $28.23 billion and imports of $28.02 billion left a January trade surplus of $206 million, which compared with a year-earlier surplus of a revised $195 million. South Korea is the first major economy in the region to report trade figures each month.
China and the U.S. take a combined two-fifths of South Korea's exports, of which electronics and autos account for about 45%.
South Korea's commerce ministry has forecast exports growth in 2007 will slow to 10.4% from 14.6% last year, citing a slowdown in the U.S. economy.