Tuesday, July 31, 2007

South Korean Exports

From Bloomberg:

South Korea's Export Growth Seen Accelerating; Prices May Rise

uly 31 (Bloomberg) -- South Korea's exports probably rose at the fastest pace in almost three years in July, stoking economic growth. Consumer prices likely increased from June.

Overseas shipments surged 21 percent from a year earlier, according to the median estimate in a Bloomberg News survey of 11 economists. That would be the biggest gain since November 2004. Consumer prices advanced an unadjusted 0.3 percent from the previous month, the survey showed. Trade will be released at 10 a.m. in Seoul on Aug. 1 and the prices report at 1:30 p.m.

Rising exports have driven 17 consecutive quarters of growth in Asia's third-largest economy, the longest expansion in more than a decade. Increased overseas demand is stoking sales of LG Electronics Inc. mobile phones, Kia Motors Corp. cars and Hyundai Heavy Industries Co. ships.

``Strong exports and imports would suggest continued growth momentum in the second half this year,'' said Oh Suktae, an economist at Citibank Korea Inc. in Seoul. ``We continue to focus on the performance of the semiconductor and shipbuilding sectors as potential drivers of export strength.''

South Korea's economy expanded 1.7 percent in the second quarter from the previous three months, the central bank said last week, more than the 1.3 percent median estimate in a Bloomberg News survey of economists. That was the strongest rate since the fourth quarter of 2005.

Hyundai Heavy, the world's largest shipyard, said on July 27 it received an order for eight large-sized container vessels valued at 1.21 trillion won ($1.3 billion), its biggest contract this year.

Global Growth

Signs of faster global expansion will keep boosting demand for South Korea's exports, which make up 40 percent of the economy. The International Monetary Fund last week raised its forecast for world growth, downplaying the risk of a U.S. credit crunch crippling economic expansion.

The global economy will expand 5.2 percent in 2007 and 2008, the Washington-based IMF said, more than the 4.9 percent it predicted for both years in April.

South Korea's consumer prices climbed 0.3 percent from June, when they were unchanged, the Bloomberg News survey showed.

``Rising oil prices continue to push up the cost of industrial goods, and a modest recovery in consumption suggests upward pressure on service costs,'' Kwon Young Sun, an economist at Lehman Brothers Holdings Inc. in Hong Kong, wrote in a report. ``A counteracting force will be falling prices for agricultural, livestock and fishery products.''

Annual Inflation

The annual inflation rate stayed unchanged at 2.5 percent in July, according to the survey of economists. That would be at the lower end of the central bank's target range of between 2.5 percent and 3.5 percent.

The Bank of Korea raised its overnight call rate target on July 12 to a six-year high of 4.75 percent on concern record lending to small companies may spur inflation. Ten of 11 economists say the bank will increase the benchmark rate to 5 percent by December.

The following tables show economists' estimates for the change in exports and imports in July from a year earlier and unadjusted consumer prices from the previous month and from a year earlier:

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