Foreign IBs forecast difficult H2 for Korea’s exports

[THE INVESTOR] The general consensus among foreign investment banks is that South Korea’s exports are unlikely to pick up in the second half of the year. Their projections, analyzed by the Korea Center for International Finance, is in contrast to those of government agencies that say the conditions are set to improve soon.

In July, the country’s exports dropped 10.2 percent from a year ago, extending the record run of on-year monthly exports drop. 

According to the KCIF, foreign IBs have mostly forecast difficult conditions for Korea for the remainder of the year.

The KCIF said that Barclays and other leading IBs consider a dramatic change in exports is unlikely saying that the global slowdown will continue to hold the country back.

Other institutions cited China’s decisions to reel back stimulus measures, slowing growth of Europe and lower-than-expected growth of the US economy will act as negative factors for Korea’s exports, the KCIF said.

In addition, the ongoing restructuring efforts in a range of industries and the scheduled enforcement of the new anti-graft act were also cited as possible risks for the country’s economy.

The anti-graft act will take effect in September, and its critics have raised concerns that the country’s agricultural and livestock industries as well as restaurants and other service sector businesses will be hamstrung.

By Choi He-suk (cheesuk@heraldcorp.com)