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S. Korean reliance on foreign markets for growth hit 4-year high in 2018

All Headlines 11:46 March 31, 2019

SEOUL, March 31 (Yonhap) -- South Korea's reliance on overseas markets to generate growth hit a four-year high in 2018, mainly due to rises in prices for semiconductors and refined petroleum products, data from the central bank showed Sunday.

According to the economics statistics compiled by the Bank of Korea (BOK), the ratio of gross national income to total exports and imports reached 86.8 percent, up 2.8 percentage points vis-a-vis 2017. This is the highest reading since 98.6 percent tallied in 2014.

The BOK findings said that the spike in chip prices caused outbound shipments to soar, while corresponding demand for raw materials and intermediate goods pushed up imports. Inbound shipments of crude oil contributed to a sharp increase in imports.

South Korea's exports and imports reached all-time highs of US$604.9 billion and $535.2 billion, respectively, last year.

"Crude prices, which rose steadily till October, contributed to more imports," a BOK official said. Because the country refines crude oil for exports, higher crude prices usually translate into more shipments going abroad, especially since the domestic market is not big enough to handle all of the country's output.

The central bank, however, pointed out that such high overseas dependency means that Asia's fourth-largest economy is inherently vulnerable to external shock and sudden changes in its trading partners.

In 2019, ongoing friction between the United States and China, and likelihood of a global economic slowdown, can adversely impact the country's growth.

"A country that relies heavily on external markets does fine if the worldwide economy thrives, but can take a hit if other countries do poorly," Hong Joon-pyo, a senior analyst at Hyundai Research Institute, said. He said that early estimates are pointing to the country's exports and imports in 2019 remaining almost unchanged from last year.

S. Korean reliance on foreign markets for growth hit 4-year high in 2018 - 1

yonngong@yna.co.kr
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