SEOUL: Booming sales to China and rising capital investment drove South Korea's exports and imports to record highs in March, the government said yesterday, but separate data showed inflation remained a worry for the economy.
Hot exports of cars and semiconductors pushed exports up 40% last month from a year earlier, with top buyer China snapping up 54% more goods in March than in the equivalent month of 2003.
Imports were up by a fifth in March, particularly because of rises in consumer goods and capital equipment, suggesting that South Koreans may be spending and investing again.
Recent economic growth in Asia's fourth largest economy has been based largely on exports, leaving the country vulnerable to changes in foreign demand and exchange rates.
But separate data released earlier showed stubborn consumer inflation remained a headache for policy makers, who have kept interest rates at record lows for months to support the economy.
“The trade data, especially higher imports of capital goods and consumer products, are a very positive, showing the economic recovery is accelerating,” Lee Gyehyung, head of the ministry's trade policy bureau, told reporters.
South Korea's trade balance was a provisional US$2.39bil surplus in March, marking the 12th monthly surplus in a row.
The consumer price index (CPI) for March was up 1% on February, marking its fourth consecutive monthly rise and the fastest monthly gain since March last year, the National Statistical Office said.
The index, which is adjusted to minimise seasonal patterns, rose 0.4% in February and 0.6% in January.
Prices have risen at an average of about 0.5% a month since July, when they bottomed after a few months of deflation.
But inflation has been a lower priority for policymakers, who have been focusing on keeping growth on track since the economy dipped briefly into recession in the first half 2003 after a consumer bubble burst.
A surge in world prices for raw materials, driven mainly by voracious Chinese demand, has made prices an area of concern.
The March CPI rise topped the median forecast for a 0.8% advance in a Reuters poll of nine economists this week.
However, economists said the inflation data were not strong enough yet to make the central bank raise interest rates any time soon. The Bank of Korea is due to hold its monthly policy meeting on April 8 to review its interest rate target. – Reuters