SEOUL- South Korea will provide up to 181 trillion won ($137 billion) of cheap loans to exporters until the end of this year and waive visa processing fees for Chinese tourists to spur exports and tourism, its finance ministry said on Monday.
The government aims to increase the number of Chinese tourists to 1.5 million a month from the current one million by expediting waiving visa fees and coordinating tourist events with retailers.
“In September, the trade balance is likely to remain in surplus while the declines in exports will further ease, and exports are likely to swing to growth during the fourth quarter,” finance minister Choo Kyung-ho told policymakers at a meeting on Monday.
Analysts at ING forecast we third-quarter economic growth will decelerate to 0.2 percent quarter-on-quarter seasonally adjusted from 0.6 percent in the second quarter, with domestic demand slowing further.
South Korea’s exports fell at a less steeper pace in August than in the previous month and market expectations, raising some hopes that the key trade engine of the economy is starting to turn a corner though doubts remain over weak demand in China.
Overseas sales from Asia’s fourth-largest economy fell 8.4 percent year-on-year to $51.87 billion in August, trade data showed, after a 16.4 percent drop in July – the worst in six months.
The August figure was better than the median forecast for an 11.6 percent decline in a Reuters survey of economists, beating all but one of 22 estimates.
The decline in China-bound exports softened to 20 percent from 25 percent the previous month, while shipments to the United States rose 2 percent after four months of decline.
Those to the European Union also swung back to positive with a 3 percent rise.
Exports of semiconductors fell 21 percent, milder than the 34 percent fall of the previous month, and petrochemical products lost 12 percent. However, automobiles rose 29 percent and ships jumped 35 percent.
“The data suggests that exports have already hit the bottom in July,” said Stephen Lee, chief economist at Meritz Securities.
“Poor external conditions are improving little by little, but there still is uncertainty over the Chinese economy, with a possibility of real estate troubles dragging down domestic demand.” – Reuters
