Seoul announces another record trade deficit
Seoul announces another record trade deficit
SEOUL (Reuter): South Korea yesterday announced a record current account deficit for the second consecutive month but officials said the numbers did not shake their confidence in the economy.
Other economic data released yesterday, including low inflation numbers, indicated South Korea was still on track for a soft landing.
The Bank of Korea said February's deficit was US$1.77 billion, up from $1.52 billion in January, with trade in goods accounting for $1.16 billion of the shortfall. The current account measures trade in goods and services.
The two-month shortfall of $3.29 billion is more than half the targeted annual deficit of $6 billion. The deficit in 1995 was $8.8 billion.
"The trade deficit rose from a year earlier because of sharp rises in the import of crude oil and consumer products," Lee Kwang-june, head of the bank's statistics department, told reporters.
"In my judgment, our economy is within a range that the government earlier expected," Choi Jong-chan, director general of the finance ministry's economic policy bureau, told Reuters.
There were signs the March trade shortfall would show a year- on-year decline, he said.
"We have many indicators foretelling a quick economic improvement," Choi said.
Yesterday the finance ministry said the producer price index (PPI) rose 2.2 percent year-on-year in March, the lowest growth since June 1994 when the index rose 1.9 percent.
The PPI is a leading indicator for future price trends and so the March figures eased worries about inflationary pressure.
The consumer price index, South Korea's main indicator for inflation, advanced 4.5 percent in March year on year against a 5.1 percent gain in February and a 4.7 percent growth a year earlier.
The central bank also said the business survey index, an unofficial indicator of confidence among companies, was 108 for the second quarter in the manufacturing sector against 92 for the first quarter and 94 for the preceding quarter.
An index below 100 means companies think the business environment will worsen and one above 100 indicates a belief the future will be better.
South Korea has targeted gross domestic product growth this year at seven percent and inflation at 4.5 percent.