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Reuters

South Korean exports in September fell for a ninth consecutive month but were offset by signs of a pick-up in domestic demand, undermining the case for an additional interest rate cut soon.
Exports fell 8.3 per cent in September from a year earlier, less than a revised 14.9 per cent decline in August, trade ministry data showed on Thursday.
"Domestic demand appears to be sustaining its recovery and the recovering real-estate market also supports a further pick-up in domestic demand down the road," said Moon Hong-cheol, a fixed-income analyst at Dongbu Securities. "Exports are not a direct factor for central bank policy consideration and therefore I think the case for an interest rate cut has diminished."
The finance ministry expressed confidence the recovery in domestic demand would accelerate, helped by a government-initiated discount sales campaign, dubbed the South Korean version of the US’ post-Thanksgiving Black Friday shopping spree.
South Korea keeps rates unchanged as economy recovers
Thursday marked the first day of the two-week sale campaign, under which the finance ministry said earlier around 26,000 stores across the country including big department and discount stores have pledged to offer discounts of up to 70 per cent.
Separate data from the statistics agency showed earlier in the day that industrial output in August grew by a seasonally adjusted 0.4 per cent from July, better than a median 1.1 per cent fall tipped in a Reuters survey.
The won and share prices rose while the main bond futures contract fell as August output and September exports figures eased concerns over Asia’s fourth-largest economy, limiting the prospects of an interest rate cut.
Data from Statistics Korea also showed the retail sales index rose by a seasonally adjusted 1.9 per cent in August from July on top of a revised 2 per cent gain in July, extending its recovery from weakness in much of the first half of the year.
The Bank of Korea cut its policy interest rate by a total of 1 percentage point to record-low 1.5 per cent in four steps between August last year and June this year to spur consumer spending at a time of depressed export demand.
This and the government’s stimulus measures did help spark a pick-up in the local property market, with a key private-sector indicator showing early on Thursday that house prices rose for a 25th consecutive month in September on-month.
The Bank of Korea is due to release its revised economic growth forecasts for this and next year on October 15. It is widely expected to lower its 2.8 per cent growth forecast for this year while rates will likely be kept unchanged if the downgrade is marginal.
 


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New Korea economic data reduces chances of more rate cuts

The finance ministry has expressed confidence the recovery in domestic demand would accelerate, helped by a government-initiated discount sales campaign. Photo: AFP

The Bank of Korea cut its policy interest rate by a total of 1 percentage point to record-low 1.5 per cent in four steps between August last year and June this year to spur consumer spending. Photo: Reuters

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Stress is evident across the US$1.4 trillion Korean economy. Photo: AP

South Korea unexpectedly cuts rates to record low

Lee Ju Yeol, governor of the Bank of Korea, attends a monetary policy meeting at the central bank's headquarters in Seoul on March 12. Photo: Bloomberg

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