All about business

South Korea's export growth accelerated in September, buoyed by increased demand from Latin America and the Middle East.

Overseas shipments, which make up more than half of gross domestic product, climbed 28.7 percent from a year earlier, the Ministry of Knowledge Economy said in Gwacheon today. That compares with August's 18.7 percent gain and the 27 percent median estimate of 14 economists surveyed by Bloomberg News.

“The healthy exports numbers today show that there still is a bright spot for the economy,'' said David Kim, an economist at Taurus Investment Securities Co. in Seoul. “The Korean economy and the global economies have been hurt, but they may not be as bad as people are concerned about.''

The deepening global financial crisis is clouding the outlook for South Korea, which has been reliant on exports to propel the economy's expansion as domestic demand faltered. Shipments to China and the U.S., the nation's two biggest overseas markets, eased last month, today's report showed.

Imports surged 45.8 percent last month from a year earlier because of higher oil and raw material prices, resulting in a trade deficit of $1.89 billion.

South Korea's won has slumped 21 percent this year against the dollar, helping exporters by making their products cheaper overseas even as it drives up local prices by boosting the cost of imports.

The won rose 1.2 percent to 1,191.80 against the dollar at 10:14 a.m. in Seoul after yesterday tumbling to the lowest level since 2003. The Kospi index of shares fell 0.8 percent to 1,435.88, the fourth straight decline.

Ship Exports

Exports of ships surged 127 percent in September from a year earlier and exports of oil products gained 89 percent.

Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., the world's two largest shipbuilders, posted record second- quarter profits as they benefited from high prices amid a global shortage of vessels to carry goods and fuel.

Shipments to Latin America surged 36.4 percent in the first 20 days of September and sales to the Middle East jumped 28.5 percent, today's report showed. Shipments to China increased 7.3 percent and exports to the U.S. rose 2.2 percent.

Slowing Growth

South Korea's economic growth slowed to 4.8 percent in the second quarter as household spending fell for the first time in four years.

Factory production rose by the least in 11 months in August and manufacturers' confidence dropped in September on concern sales and profitability will decline, reports showed yesterday.

“Exports, which have been supported by emerging market demand, are bound to lose steam a bit as the global economy slows,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul.

Posco, Asia's largest maker of stainless steel, said on Sept. 9 it planned to cut output in September following similar reductions in July and August because of weak demand.

Exports of semiconductors declined 10 percent in September. Those of automobiles dropped 18 percent after a labor strike reduced production, today's report showed.

Hyundai Motor Co., South Korea's biggest automaker, last week secured workers' approval for a sweetened pay deal, signaling an end to stoppages that have cost the carmaker at least 691 billion won ($583 million) in lost production.

Figures today may show inflation cooled in September, giving the central bank scope to consider an interest-rate cut to bolster economic growth, according to a survey of economists.

“The Bank of Korea may cut rates later this year or early next year to support the economy if inflation eases,'' Hyundai Securities' Lee said.

Policy makers will weigh risks to economic growth and inflation when setting policy, the central bank said yesterday, adding inflation will likely remain high “for a while.''

Governor Lee Seong Tae and his board kept the benchmark interest rate unchanged at an eight-year high of 5.25 percent last month. Their next decision is due on Oct. 9.

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