SEOUL - South Korea on Sunday predicted a gradual recovery in exports in the second half of 2012 as June data showed demand for products from the country growing globally, but revised down its overall trade outlook for the year.
An analyst said June export data showed world trade was passing through a trough after taking a hit from fears the euro zone’s fiscal crisis and that efforts by China and the other big economies to draw up measures to boost spending boded well.
“It’s good to see the global trade is not deteriorating any further and we may see some improvement or at least efforts to make things better from China around their leadership change later this year,” said Park Sang-hyun, chief economist at HI Investment & Securities.
The South Korean economy ministry’s latest forecasts mean exports in the July-December period would grow 6.2 percent over a year earlier, compared with a 0.7 percent gain scored during the first six months.
The latest export and import projections would now bring this year’s trade surplus at $23.5b, down slightly from $25b seen before and smaller than an actual $31 billion surplus set in 2011. The revisions reflect a sharp decline in demand from such key markets as Europe and China earlier in the 2012 first half and have fuelled expectations that South Korea’s central bank may lower interest rates to partner with fiscal stimulus to avoid a repeat in the second half of the year.
The Bank of Korea has kept the key policy rate unchanged at 3.25 percent for the past 12 months after having raised it by a total 125 basis points since late 2010.
At a summit last month, leaders from the world’s 20 major economies signed up to measures designed to support the global economy, saying those with budgetary leeway were now ready to coordinate on fiscal stimulus measures, if needed.
On Thursday, the South Korea’s finance ministry cut its 2012 economic growth forecast to 3.3 percent from 3.7 percent previously due largely to the weak external demand and pledged to spend more than $7 billion to boost the economy.