The South Korean export increased 27.2% in May 2008 due to high overseas demand for electronic products, depreciation in domestic currency and government support.
According to the Ministry of Knowledge Economy, the export from South Africa augmented by 27.2% in May 2008 against the same month last year. The growth in the month of May followed 26.4% increase in April 2008 and was highest in last four years (2004-2007). It also exceeded the 22.6% median estimation made by economists, as reported by Bloomberg.
The ministry also revealed that the petrochemical goods export increased by 118% and of ships in the period May 1-20, 2008 rose by 56% from the same period last year. Besides, the export of wireless telecommunication devices including mobile phones surged 36% in the initial 20 days of May 2008.
The boost to the South African export was given by rising demand for mobile phones, ships and flat screens in China, Latin America and the Middle East. In addition, China and other emerging countries have shown high demand for South Korean mobile phone and other electronic products, giving support to South Korean export.
Furthermore, the depreciation in Korean currency (won) has also contributed to raise the demand of South Korean companies’ products. As the value of Korean currency is low in the international market, foreign countries are increasingly buying the Korean products because they pay less for them.
Another chief reason for high export from South Koreas is due to close business or government ties. Some of these are directed credit, sponsorship of specific industries, strong labor effort and import restrictions. The South Korean government has given priority to import of technology and raw materials over consumer goods and emphasized on savings over consumption.
Meantime, the South Korean economy is expected to grow in future, as exports from the country remain strong. However, the domestic demand is likely to remain low because of rising fuel prices. Seeing the buoyant exports and rise in consumer expenditure, it is expected that Bank of Korea delay interest rate cut to increase domestic demand.
According to a Research Analyst at RNCOS, “The export from South Korea is rapidly growing due to value decline in its currency. The exporters should maintain the current growth amidst slowdown in the world economy and credit crisis by offering quality products at competitive prices. Furthermore, it also helps South Korean companies to grow rapidly.”
