South Korean exports are expected to grow by just 10% in 2005 due to expectations of a slowdown in global demand, the head of a trade agency said.
“The industry earlier hoped it would widen exports by 20 per cent from this year to US$300 billion next year, but it is unlikely to do so,” Kim Jae-chul, president of the Korea International Trade Association, told a press conference.
He said it will be difficult for exports of such products as cellular phones, semiconductors, steel, cars and ships to continue growing at such a large rate next year, citing the possibility of a slowdown in demand from China as one example.
South Korean exports will total about $270 billion next year after posting remarkable growth of an estimated 33% to $250 billion this year, he forecast.
This year’s trade surplus will hover around $30 billion, he added.
Expressing his concerns about the strengthening Korean won against the US dollar, Kim forecast the greenback will stabilize in the 1,000 won-1,100 won range.
The US dollar has fallen nearly 12% against the local currency this year. A sharp rise in the won’s value against the US dollar is bad news for South Korean exporters as they lose price competitiveness in overseas markets.
“A 10% fall in the dollar-won exchange rate has the same effect as a 10% rise in manufacturing costs,” Kim said. “I hope the government will interfere in case of any further sudden fall in the rate.”
However, excessive government intervention can also fuel speculation in the currency market, which is not desirable, he added. (Asia Pulse Pte Limited /Yonhap)