South Korean export industry grew slowest in October 2008 to record a 13-month low, corresponding to the declining demand induced by the global financial slowdown.
The Ministry of Knowledge Economy disclosed that contradicting the market expectations, South Korean exports registered the lowest growth in 13 months, reported Forbes.
In October 2008, exports from the country increased 10% on YOY basis, recording the slowest growth rate since September 2007 when the overseas exports from South Korea declined by 1.1% from September 2006. The country completely missed out the 14.4% growth prediction made by a Reuters’ poll. Earlier, the country witnessed an annual increase of 28.2% in September 2008, following a rise of 18.2% in the preceding month.
During the first 20 days of October 2008, South Korea’s exports to China, the biggest market of South Korea, declined by 1.8% over the same period in 2007. This is representing a slump from 15.5% hike in September 2008. Also, during the same period of 20 days, the exports to EU went down by 8.2%, following a rise of 26.7% in the previous month.
The factor that triggered the downfall of the exports from South Korea is the economic turmoil affecting the whole world. The global crisis penetrating into the emerging markets and the slow economy of the developed nations resulted into the fall in South Korean exports. Particularly the economic slump in China has hampered the South Korean exports tremendously as it fairly depends on China for exports.
Further, the declining prices of oil and other raw materials have also played a key role in slowing down the growth rate of South Korean exports. The panic evolved as a consequence of economic recession in South East Asia slashed down the orders for their products globally.
Moreover, the demand for South Korean products is expected to further go down as the world economy would probably contract even more. It is also expected that the central bank of the country would further slash down the interest rates to avoid the sharp economic slowdown in the country.
According to a Research Analyst at RNCOS, “The slow worldwide demand has reduced the demand for South Korean products significantly. The liquidity crunch started spin off from the financial turmoil in the US forced importers to cut and even cancel orders. The export industry needs to wait for some time to see any improvement in orders.”
