Export contribution to S. Korea's growth hits 5-year low

SEJONG, April 2 (Yonhap) -- The contribution of exports to South Korea's economic growth fell to a five-year low in 2014 as outbound shipments were hurt by a slower than expected global recovery, central bank data showed Thursday.

According to data by the Bank of Korea (BOK), of South Korea's 3.3 percent economic growth last year, 1.5 percentage points resulted from overseas shipments of goods and services.

This translates into a contribution rate of 45.5 percent, the lowest since 2009 when numbers reached minus 28.6 percent as the global economy was paralyzed by a financial crisis. A minus reading means exports actually brought down overall growth.

The contribution rate surged to 202.7 percent in 2011 from 92.3 percent the previous year before falling to 121.7 percent in 2012 and 82.76 percent in 2013.

Excluding exports, consumer spending and business investments contributed 1.3 percentage points and 1.5 percentage points to economic growth each last year, while the figure for imports was minus-1 percentage point.

On the drop in export contribution, a BOK source said overseas development played a part in the weaker number as well as more impact exerted by domestic consumption and investment.

Despite such an explanation, the sluggish pace of export growth over the past years is seen as a troubling development for the economy, especially since domestic spending remains weak and unable to pick up the slack

South Korea's exports dropped 4.2 percent on-year in March, more severe than the 0.7 percent and 3.4 percent loss reported for January and February.

Local economists said that the fall in exports stemmed from a combination of a weak Japanese yen, a slower than expected global economic recovery, and a drop in international crude prices that is keeping prices of petrochemical products down.

South Korea is a major exporter of refined petroleum and chemical products.

"If nothing changes, there is a good chance that exports will continue to decrease in the coming months and that will require a rethinking of the country's industrial and even foreign exchange policy," an expert said.

On the other hand, officials at the finance ministry sounded a rather rosy note.

Despite a drop in the value of exports, total volume has actually gone up, an indication that South Korean products remain competitive in overseas markets, they said.

Leading indicators show exporters feeling more upbeat about conditions in the second quarter, which could lead a rebound in shipments in the April-June period, they added.

yonngong@yna.co.kr
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