SEJONG, April 24 (Yonhap) -- South Korea's exports are expected to contract for the fourth consecutive month in April, customs data showed Friday, raising concerns that the country's main growth engine is losing steam.
Outbound shipments of products were tallied at US$27.25 billion in the first 20 days of this month, down 11.1 percent from the same 20-day period a year earlier, according to the data by the Korea Customs Service (KCS).
Private economists cast a gloomy outlook, saying overseas shipments will unlikely rebound into positive territory, even considering the usual rise of exports towards the end of the month
Kwon Young-seon, an economist for Nomura Securities, predicted South Korea's exports will drop 7.6 percent on-year this month.
The forecast is a greater decline than the 4.3 percent fall posted for March and will mark the longest contraction since exports backtracked for a year following the 2008 global financial crisis.
From November 2008 through October of the following year, South Korea's exports plunged by double digits compared to the year before as the financial crisis effectively paralyzed the global economy and trade.
The KCS said weak crude oil prices are having a direct impact on exports by pushing down the price of locally made petrochemical and refined petroleum products that make up a large part of the country's outbound shipments.
As of March, exports of refined petroleum and petrochemicals nosedived 32.4 percent on-year. The average price of Dubai crude stood at $52.62 on Tuesday, down 45.5 percent from $96.56 last year.
LG Economic Research Institute (LGERI), a private think tank, said the drop in South Korean exports may not be a short-term development, but rather a systemic problem linked to such factors as changes in China's growth strategy, weak crude prices and the strong Korean won.
In particular, China's shift in emphasis from exports to building up its internal consumer market may impact exports of South Korean made intermediate goods to the world No. 2 economy, the think tank said.
With the United States increasing output of shale gas and the Japanese yen remaining weak, South Korean exports will struggle in the international market, it added.
A weak yen makes Japanese products, which compete directly with South Korean goods in many overseas markets, cheaper.
"A rise in U.S. interest rates may temporarily cause the Korean won to weaken, but with Seoul likely to post a sizable current account surplus down the road, the local currency will likely face appreciation pressure," LGERI said.
Faced with mounting challenges, the government is expected to announce measures within the month that can help companies make greater inroads into China's domestic market, support exports by small and medium enterprises and increase trade insurance coverage.
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