Export growth forecast to slow to 10% in 2007

Korea’s export growth remains steady but there are signs of overseas shipments losing steam, a state-run think tank said yesterday, fueling worries over an economy stung by weak domestic demand.
“Exports posted a brisk increase of 21.4 percent in January, but such a sharp rise was due to relatively weak exports in January 2006, when the New Year’s holiday fell,” the Korea Development Institute said.
If the holiday factor is excluded, exports in the first 20 days of January increased only 9 percent from a year earlier, the development institute said.
Economists fear that exports may slow down this year as global demand cools and the local currency rises against the U.S. dollar.
A slowdown in the U.S. economy may reduce demand for Korean products, while the stronger won will make Korean goods more expensive overseas, they say.
According to the development institute, seasonally-adjusted daily exports have steadily slowed since last October.
Korea’s export growth is forecast to slow to 10 percent this year from 14.6 percent last year, the nation’s Finance Ministry said last month.
Growth of domestic spending is expected to fall to 3.9 percent in 2007 from 4.2 percent last year, resulting in a 4.5 percent economic growth for all of 2007.
According to the institute’s report, domestic spending indicators are showing signs of steady stabilization.
In December, the overall growth rate of consumption slowed down, but this slowdown is mainly due to the unusually high rise over the same month of the previous year, it said.
Consumer goods sales in December grew 2.7 percent from a year earlier, compared with a 9.6 percent increase the previous year.
Meanwhile, corporate capital spending growth slowed to an annual 2.1 percent in December from a 12.6-percent increase a year earlier, the institute said.