Exports hit high in Nov.
Currency trends weigh on manufacturers
By Kim Min-hee
With the economy yet to bear the full brunt of the strengthening won, Korea's exports hit an all-time monthly high for the second straight month in November, the Ministry of Commerce, Industry and Energy said yesterday.
The ministry said November exports climbed to $23.31 billion, marking an year-on-year increase of 27.8 percent. The figure also put an end to a five-month decline in for the growth rate.
Imports also hit a record-high for the second month on higher oil and raw materials prices and climbed to $20.54 billion, rising 30.3 percent over last year.
The ministry said it expects Korea's yearly exports to surpass $250 billion. In the 11 months to November, Korea exported goods worth $230.9 billion, showing a robust year-on-year growth rate of 32.6 percent. Imports also rose 26.3 percent to reach $203.6 billion.
The increase in exports was led by the traditional items such as ships, mobile phones, autos and auto parts and semiconductors. Among the strong performers were petrochemicals, steel and machinery.
By region, exports rose to all major markets including China and the United States, where Korea has accumulated surpluses of $12 billion and $17.9 billion, respectively. However, the trade deficit with Japan this year further widened to $21 billion.
"Korea's exports took a favorable turn in November with companies yet to bear the full impact from the fall in the exchange rate," a ministry official said. Analysts predict exports will decelerate starting in February or March next year.
A report on manufacturers' sentiment released by the Bank of Korea suggests currency trends have already started to take a toll on exporters.
The report, based on a survey of 2,900 companies, showed Korean manufacturers maintaining a negative business outlook, with an expectations index falling from 74 in November to 73 this month. A reading of below 100 indicates more companies are pessimistic than optimistic.
Furthermore, an index of exporters' profitability plummeted to 69 in November, seven points down from 76 in October, according to the report.
The index for exports growth for December also fell to 96 from 105 in November, the first time this year the figure has dipped below 100.
Sluggish domestic demand continued to top the list of hardships faced by companies at 29.7 percent, followed by 20.7 percent which cited strong raw materials prices and 14.9 percent the uncertain business climate.
The strengthening won also emerged as a major headache for companies, with 8.5 percent saying it is a difficulty. This compares to just 1.4 percent in the previous survey.
On top of higher oil and raw materials prices, Korean companies are struggling to stay profitable amid the strengthening won, which has gained 14 percent against the U.S. dollar this year. A strong won hurts the competitiveness of exports, presently the main driving engine for Korea's economic growth.
At a news conference last week, Kim Jae-chul, president of the Korea International Trade Association, predicted Korea's exports growth rate to slow to about 10 percent due to less global demand, compared to this year's 30 percent.
The Korean won yesterday firmed up on the news of record-high exports and slower-than-expected November inflation, and traded at 1047.6 against the greenback at 2:44 p.m., compared with Tuesday's close of 1,048.2. At midday, it had reached 1,046.8 per dollar.