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South Korea Exports Dip Sharply Amid Global Gloom

296 days ago

(RTTNews) - South Korea's exports declined sharply in July, adding to signs that the economy is losing momentum as the European debt crisis cripples external demand.

The data released by the Ministry of Knowledge Economy showed Wednesday that exports declined 8.8 percent year-on-year to $44.6 billion in July. The rate of decline was sharper than a 3.7 percent fall expected by economists.

Imports fell 5.5 percent compared to expectations for a 2.4 percent drop. The trade surplus narrowed to $2.7 billion in July from $4.9 billion in the previous month. Economists expected a surplus of $3.8 billion.

Data supports the case for more policy easing after a surprise rate cut by the central bank in July. Another set of data today showed that inflation in South Korea eased to a 12-year low last month.

Earlier in July, the Bank of Korea slashed the gross domestic product growth forecast for 2012 to 3 percent from April's forecast of 3.5 percent. In 2013, growth is seen at 3.8 percent compared to 4.2 percent projected earlier.

However, central bank Governor Kim Choong-soo had expressed doubt if the economy could hit the growth target of 3 percent this year due to worsening global economic conditions.

A recent survey by the Bank of Korea revealed that South Korean manufacturing confidence declined to its lowest level in more than three years amid fears that a worsening Eurozone situation may affect firms' export intentions in the coming month.

The latest survey of purchasing managers, released by Markit Economics on Wednesday, pointed to sharpest contraction in the manufacturing sector since December 2011. The PMI fell to 47.2 in July from 49.4 in June.

Markit said new orders received by South Korean manufacturers also declined at the fastest pace since December 2011, while new export business decreased for the second successive month amid reports of a downturn in the international economic climate.

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