Japan’s export control measures, while remaining a core risk factor, will not affect Seoul’s growth outlook, it added.
“Despite the gradual improvement in domestic consumption, exports and investments continue to remain dull,” the Ministry of Economy and Finance said in its monthly economic report.
|(Ministry of Economy and Finance)|
The report, called the Green Book, reflects the latest economic indicators -- industrial output, exports, consumption and investment.
Asia’s fourth-largest economy saw exports fall to $44.1 billion in June, down 13.5 percent on-year amid a depreciation of chip prices and weaker outbound shipments to China. Also, the persistent trade conflict between the United States and China -- Korea’s two top trading partners -- weighed on the export-dependent economy.
Consumer prices rose 0.7 percent in June from a year earlier due to falling global oil prices and the slow pace of growth in services charges, the report added.
Seoul’s government is also planning to allocate an extra budget so that it can respond more effectively to external risks -- including Japan’s latest export restrictions, which mainly affect the semiconductor sector.
It is unlikely, however, that the Japan factor will impact the growth outlook or other macroscopic indexes, according to the ministry.
“As the export curbs took effect from July 4 and the related process is to last for 90 days, the level of uncertainty is very high,” said an official with the ministry’s economic analysis department.
But when asked about the possibility of lowering Seoul’s recently revised growth outlook for this year, the official remained skeptical.
“It is true that global investment bank Morgan Stanley is making downward adjustments on Korea’s growth outlook, but the government outlook does not fluctuate that easily,” he said.
“When it comes to the Japan factor, we are currently assessing the level of risk.”
The central bank data also showed the country’s export prices fell in June, marking the first on-month drop in five months.
The country’s export price index stood at 100.95 as of end-June, down 2.1 percent from the previous month and down 2.5 percent from a year earlier, according to preliminary data from the Bank of Korea. It was the first time the figure slipped since January this year.
The key factor was the global oil price downtrend. While the value of the Korean won slipped 0.6 percent against the US dollar, export prices in terms of the local currency made a steeper fall, down 1.5 percent from a month earlier.
Looking at product categories, prices of coal and petroleum products dipped 8.3 percent from a month earlier, with semiconductors next highest at 3.4 percent.
“The slow recovery of semiconductor prices, combined with weak oil prices, impacted export prices in general,” said an official with the central bank.
The import price index came to 109.58 in June, down 3.5 percent from the previous month and also marking the first on-month decline in five months.
By Bae Hyun-jung (firstname.lastname@example.org)