Korea’s surplus outstrips Japan’s in year’s 1st half

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Korea’s surplus outstrips Japan’s in year’s 1st half

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For the first time, Korea’s trade surplus outranked Japan’s during the first half of the year, the government said yesterday.

Korea’s relative strength was in part attributed to the combination of the weak won and the strong yen, but some local experts say it indicates an increasing recognition that a “Made in Korea” label may be eclipsing one reading “Made in Japan.”

Compiled by the Ministry of Strategy and Finance, the Organization for Economic Cooperation and Development data showed that Korea’s trade surplus in goods in the January-to-June period was $26.6 billion.

That ranked Korea in second place among the 30 OECD countries. Germany leads the way with a $71.9 billion surplus.

Japan placed sixth at $9.1 billion, trailing not only Korea and Germany, but Norway, Ireland and the Netherlands.

Trade surplus in goods is the net of exported goods minus imports.

Usually, the country ranking for a trade surplus in goods is measured by yearly data, which has never placed Korea ahead of Japan.

But even beating Japan over a six-month period carries significance for Korea as Japanese goods were the prototype of many goods manufactured in Korea for several decades.

For years, Japan maintained the leading position in trade surplus until Germany took top honors in 2001.

Last year, when the global financial crisis broke out, Japan fell to No. 5, with a $37.6 billion surplus.

Korea held the No. 3 position in 1998 and 1999, and then dropped several notches between 2000 and 2007. It fell to No. 11 last year.

Still, the gap between Korea and Japan has been shrinking over the years - from $135.6 billion in 1995 to $99.5 billion in 2000, $62.3 billion in 2005 and $31.6 billion last year.

“The foreign exchange effect is not negligible, but we feel that improved competitiveness of Korean goods also played a part,” said Kim Kyung-gook, a deputy director of the Finance Ministry.

Shin Chang-mock, an economist at Samsung Economic Research Institute, agreed, but said that “the exact extent to which the improved image of Korean goods contributed to the rising trade surplus in goods needs to be studied.”

The local currency was among the world’s worst performers last year and stayed quite low against the dollar until early this year.

The weaker won lowered the prices of Korean exports.

Japan’s yen, on the other hand, strengthened versus the greenback, impeding its exports.


By Moon Gwang-lip [joe@joongang.co.kr]

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