Monday, January 3, 2011

Korean Exports Return to Pre-2008 Levels

All indicators of economic strength appear to be doing well for South Korea.  Exports have returned to pre-2008 economic crisis levels and trade volume is set to exceed $1 trillion this year.  Good job Korea!

Trade volume will exceed $1 trillion this year, with exports expected to be more than $500 billion, said the Ministry of Knowledge Economy in its annual forecast.
The ministry said that Korea became the world’s seventh biggest exporter in 2010, up from ninth place in 2009, as trade volume reached a record high.
Korea had $467.4 billion in exports in 2010, up 28.6 percent from a year earlier, while imports reached $425.7 billion, up 1.8 percent.
Korea and China have been the only major exporters that have recovered to pre-2008 global financial crisis levels.
Officials said exports to emerging countries, including China, Latin America and Southeast Asia, were on the increase.
Imports have grown because of rising costs for raw materials and capital goods. 
The ministry said that 2011 presents new opportunities for Korea, with exports expected to reach $513 billion and imports $488 billion. But the trade surplus is expected to fall to $25 billion.  [...]
“In 2011, a new $1 trillion trade era will open as we will fully utilize developing new markets as well as the free trade agreements with the U.S. and the European Union,” said the ministry. “We will become firmly established as one of the trade giants and create more jobs as well as improving the quality of our internal economic stability.”
Meanwhile, the Korea International Trade Association announced three key goals for 2011’s trade environment, as it expected exports to continue to grow but warned of slimmer profit margins.
KITA said Korean exporters should advance further into emerging markets, strengthen product competitiveness and avoid low-value exports.
In a recent survey of 900 KITA members, 41.9 percent said Korea will have better product competitiveness compared to its rivals, while 28.8 percent said they saw emerging markets as key opportunities for Korea. 
The companies said that a rise in raw material prices and a strong won pose risk factors.
Nearly three-fourths of those surveyed expected an increase in Korean exports this year, with more than 50 percent saying the growth rate will be over 5 percent.
KITA said it expected only a limited increase in export prices. Computers and machinery were selected as the two top products to increase the most. 
“In order to prepare for the coming fight to maintain export profit margins, industries should use currency insurance or forward exchange contracts and minimize losses by securing supplies of raw materials in advance,” said a KITA official.
“The government should also expand its support for currency management and ways to secure raw materials,” it said.
Currency management is bad for English teachers.  Making the exchange rate between won and dollars worse for won makes Korean manufactured goods cheaper to buy, which boosts exports.  The downside is for people earning won who want to then trade in dollars (or have debt in dollars) and are constantly fighting the devaluation of the won.

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