S.Korea Feb exports soft, underscore fragile momentum * Feb exports up 1.6 pct vs yr ago, weaker than expected * Data flags soft global demand amid renewed U.S., China doubts * S.Korea c.bank may face easing pressure should growth falter South Koreas exports in February grew at a weaker-than-expected pace, government data showed on Saturday, suggesting sluggish growth conditions for the trade-reliant country amid renewed jitters about the health of the global economy. Overseas shipments last month rose 1.6 percent from a year earlier, the Ministry of Trade, Industry and Energy said in a statement, compared with a median forecast for a 3.4 percent rise tipped by a Reuters poll of analysts. Put together with Januarys data, which economists say removes distortions stemming from the Lunar New Year holiday, South Koreas exports grew by just 0.6 percent in annual terms. The data from South Korea, the first export powerhouse to report its monthly trade performance, underscore tepid global trade conditions and follow a string of disappointing U.S. indicators and mounting concerns about Chinas growth. Saturdays numbers suggest that a full recovery for Asias fourth-largest economy remains some ways off, increasing the likelihood that the Bank of Korea will keep the benchmark policy rate unchanged from the current 2.50 percent for the time being. A recent string of data from South Korea has shown a pickup in domestic demand. Januarys strong retail sales figures along with service-sector output growth suggest an improving private sector will offset lacklustre external demand and keep the economy growing. But Saturdays trade figures offer no relief for South Korea, where policymakers expect a full recovery this year. The Bank of Korea currently expects growth to accelerate to 3.8 percent this year from an estimated 2.8 percent expansion in 2013, but a sustained period of weak trade performance could make the central bank reconsider its projections. Trade ministry data showed that exports to China, South Koreas biggest market, rose by 3.8 percent last month while shipments to the European Union rose 10.6 percent. However, exports to the United States fell 6.7 percent. Crisis for emerging countries amid a delay in full-fledged recovery in the advanced economies has led to weaker-than-expected exports growth, the trade ministry said, noting that last months shipments to Indonesia and South Africa fell by an annual 34.9 percent and 69.1 percent respectively. Most analysts expect Koreas exports will pick-up later in the year as the recovery in the United States takes hold, and the risk of a crash landing in China are seen to be small. Based on such assumptions, the Bank of Korea is seen raising interest rates late this year as inflationary pressures resulting from firmer growth build. Should growth falter the central bank will face immense pressure to lower rates as the government attempts to reduce its deficit, with limited fiscal capacity to stimulate the economy. The central bank has so far sounded confident about the countrys growth trajectory, but some senior lawmakers of the ruling Saenuri Party have already called for more policy easing to boost the economy earlier this year.
Posted on: Sat, 01 Mar 2014 04:29:28 +0000
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