SEOUL: South Korea’s exports are expected to bounce back in the second half of this year, which could allow the nation’s trade volume to top the US$1 trillion mark for a fifth year in 2015, the top economic policymaker said Tuesday.
Speaking at a meeting with foreign news correspondents in Seoul, Finance Minister Choi Kyung-hwan said outbound shipments are on the mend after a poor showing in the first half.
According to government data, exports fell 5.1 percent on-year to $268.7 billion in the January-June period, while imports nosedived 15.6 percent to $222.4 billion.
In June alone, outbound shipments were down 2.4 percent, while imports fell 13.6 percent. Both exports and imports, however, rose compared to the month before. In 2014, exports topped $572.7 billion with trade hitting $1.09 trillion.
Finance Minister Choi Kyung-hwan (L) outlines South Korea’s economic policy goals in the second half to foreign reporters in Seoul on July 21, 2015. (Yonhap)
Finance Minister Choi Kyung-hwan (L) outlines South Korea’s economic policy goals in the second half to foreign reporters in Seoul on July 21, 2015. (Yonhap)
Exports are a key growth engine for Asia’s fourth-largest economy. Negative growth in the first half is cited as one of the key reasons why the government downgraded its growth forecast for this year from 3.8 percent to 3.1 percent.
The finance minister also said Seoul will actively encourage overseas investment, which will allow an outflow of capital generated by the country’s current account surplus.
“Encouraging overseas investment and mergers and acquisitions is not aimed at trying to weaken the Korean won, but to improve overall economic efficiency,” he said.
Choi, who doubles as deputy prime minister for economic affairs, said that he did not view the sharp appreciation of the U.S. dollar against the South Korean won as a sudden shift in the foreign exchange market.
“With the exception of the U.S. dollar, all other major currencies have weakened,” he pointed out. On concerns that a move by the U.S. Federal Reserve will spark a capital outflow, Choi said some measures can be taken to control movements if the need arises.
Stressing the government plans to make full use of a 22 trillion won (US$18.9 billion) economic stimulus package, he said that if South Korea fails to make meaningful reforms, the country could face problems that triggered two decades of moribund growth in Japan.
“As a means of pushing forward change, the government plans to introduce a bill that will facilitate corporate restructuring in such areas as the construction and shipping sectors,” he said.
Choi, meanwhile, said that the government welcomes foreign capital investment in South Korean companies, saying U.S. hedge fund Elliott Associates’ role in the merger of Samsung C&T Corp. and Cheil Industries Inc. was a matter that should be decided by shareholders.
At Samsung C&T’s emergency shareholder meeting last week, Elliott voted against the merger, claiming that it goes against the interests of shareholders and undervalues Samsung C&T.
“This development showed the need for local companies to do more to protect the interests of shareholders and make timely investments that can raise the value of their businesses,” Choi said.
