South Korea’s exports are likely to grow around 1.7% this year as the eurozone debt crisis and China’s slowing will likely curtail demand for Korean goods, Yonhap News Agency reported Sunday, quoting a research report.
According to a report by the Hyundai Economic Research Institute, South Korea’s exports are likely to grow 1.7% this year, below the government’s estimate of 3.5% growth. The central bank forecast exports of goods to grow 4.4% this year.
The fall in export prices and the local currency’s gain to the dollar will also serve as setbacks for Korea amid global moves to strengthen major countries’ trade protectionism, the report noted.
The prolonged eurozone debt turmoil and China’s slowing growth are blurring prospects for the Korean economy, which heavily depends on overseas shipments for growth. More analysts bet on another rate cut by the Bank of Korea as early as this month to 2.75%.
Exports have already showed signs of faltering and fell 6.2% on-year in August, leading their combined value to post a 1.5% on-year fall during the first eight months. Imports also declined 9.8% last month from the previous year, indicating that domestic demand remains sluggish.
Korea’s exports to emerging countries have also shown signs of faltering as overseas shipments to China, Korea’s largest trading partner, declined 5.6% on-year in August. In July, exports to the world’s No. 2 economy shrank 5.2%.
The Korean economy is expected to grow at the 2% range this year, due to weak exports and sluggish domestic demand. Last year, Asia’s fourth-largest economy grew 3.6% from a year before.