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South Korean ecomony strong—multiple indicators prove

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South Korean ecomony strong—multiple indicators prove

Sim and Kang 7/11 (William and Shinhye—writers for Bloomberg Businessweek, “South Korean Central Bank Raises 2010 Growth Forecast (Update2),” 7/11/10,

July 12 (Bloomberg) -- The Bank of Korea raised its economic growth and inflation forecasts for this year, signaling it may follow last week’s interest-rate increase with more moves. Gross domestic product will expand 5.9 percent in 2010, more than the 5.2 percent predicted in April, the central bank said today in Seoul. It trimmed the estimate for next year to 4.5 percent from a previous 4.8 percent. Governor Kim Choong Soo on July 9 raised the benchmark interest rate by a quarter point to 2.25 percent, the first increase since the global crisis, as a strengthening economy threatened to stoke inflation. The bank said today consumer prices will rise by 2.8 percent this year, compared with the previous estimate of 2.6 percent, and 3.4 percent in 2011. “Last week’s rate increase is just the beginning and the question is when the next moves will come,” said Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul who forecasts borrowing costs to rise to 2.5 percent by the end of the year. “It won’t hurt the economy much as rates are being normalized from a super-low level.” The won was little changed at 1,196.60 per dollar at 10:30 a.m. in Seoul, after earlier touching 1,193.75, the strongest since June 24, according to data compiled by Bloomberg. It’s gained 4.4 percent in the past month, the biggest among Asia’s 10 most-used currencies. The Kospi stock index rose 0.4 percent. Goods Exports Goods exports will rise 26.4 percent this year, more than an 18.6 percent gain estimated in April, today’s report showed. Overseas shipments, which account for about half of South Korea’s economy, jumped 32.4 percent in June from a year earlier, an eighth straight monthly increase. Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, last week reported record earnings last quarter, as a recovery in demand for computer-memory chips drove up prices. The government on June 24 boosted this year’s growth forecast to 5.8 percent from a December projection of 5 percent, saying the global recovery has spurred exports and local demand. The International Monetary Fund last week raised its forecast for the country to 5.75 percent from 4.5 percent. The central bank is targeting inflation of between 2 percent and 4 percent on average through 2012. Governor Kim last week joined policy makers in India, Malaysia and Taiwan in lifting rates, judging that Asia’s expansion will remain resilient to Europe’s debt crisis. Private consumption will probably increase 3.9 percent this year, and corporate investment on facilities will advance 20.9 percent, the Bank of Korea’s estimates showed. South Korea will post a current-account surplus of $21 billion this year, more than the $10.5 billion estimated in April, the bank said. The surplus is likely to narrow to $11 billion in 2011, it forecast. The nation reported a record surplus of $42.7 billion last year. .

High – exports

South Korean economy stabilizing—exports reach record high

Xinhua News 7/15 (“S. Korea's Exports Surge in H1 Amid Economic Recovery,” 7/15/10,
South Korea's exports expanded 34.4 percent year-on-year in the first half on the back of an economic recovery, a government report said Thursday. According to the report by the Korea Customs Service (KCS), exports totaled a record high of 221.5 billion U.S. dollars during the January-June period, up from a 164.8 billion U.S. dollars a year ago. Meanwhile, imports also marked a sharp growth of 40.2 percent year-on-year, hitting 203.9 billion U.S. dollars, with the nation' s trade surplus for the cited period topping 17.6 billion U.S. dollars. The large gain in exports, according to the KCS, came as the recounting global economy boosted demand for locally made semiconductors and vehicles. Meanwhile, exports in June also jumped 30.1 percent to a monthly record of 41.9 billion U.S. dollars, while imports rose 38. 2 percent to 35.5 billion U.S. dollars, summing up the month's trade surplus at 6.4 billion U.S. dollars, according to the report.

High – growth rates

South Korean economy strong—high growth rates prove

Cheon 7/15 (Jong-woo—news correspondent for Reuters, “POLL-South Korea's Economy to Gather Speed; Rate View Unchanged,” 7/15/10,
SEOUL, July 14 (Reuters) - South Korea's economy is expected to grow much faster this year than economists had forecast three months ago as demand both at home and abroad is expanding more strongly, a Reuters quarterly poll shows. Most of the 21 analysts surveyed saw the central bank raising the interest rate to as high as 2.5 percent by the end of this year, however, many of the forecasts were made before the Bank of Korea surprisingly raised the rate on July 9. Analysts downgraded their views on the won compared with three months ago and said lingering investor anxiety about the European debt crisis would limit the upside for what is Asia's worst performing currency so far this year. "The economy will continue to post solid growth because the slowing recovery in the U.S. and Chinese economies will not amount to a double-dip slump situation and seriously hurt the domestic economy," said Kim Jae-eun, an economist at Hyundai Securities. "The Bank of Korea raised rates earlier than expected, but a further increase will not come that fast," added Kim, who made his forecast after the Bank of Korea raised rates by 25 basis points from a record-low 2 percent on July 9. Asia's fourth-largest economy is now forecast to expand by 5.7 percent in 2010, compared with expectations of 5 percent growth in the prior quarterly poll published in April. It has pulled out of the 2007/2008 crisis ahead of most others and has already been tipped to enjoy the fastest growth next to Turkey this year among members of the Organisation for Economic Co-operation and Development

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