Foreign investors upbeat about Korea's export-driven economy
WASHINGTON (Yonhap) -- Korea appears to be on course to widen its trade surplus for the time being, which would help keep its currency appreciating, foreign financial institutions said Monday.
They expect Asia's fourth-largest economy to improve exports in the coming months, mainly boosted by an upturn in the global electronics market.
Still, the country's large family-controlled conglomerates, or chaebols, are cautious about imports of capital equipment and intermediate goods, as liberal presidential candidates are calling for a break-up of chaebols to create what they call a "fairer" playing field for smaller firms.
"This would widen the goods surplus in the fourth quarter," Barclays said in a report. "In view of this, we raise our full-year forecast to US$34.5 billion from US$24 billion."
South Korea chalked up an account surplus of $6.07 billion in September, much higher than the $3.7 billion that the London-based investor expected.
Barclays said South Korea's won is likely to continue to add to its value.
"We remain comfortable with our 12-month U.S. dollar/Korean worn forecasts of 1,050," it said.
The won has appreciated 5.6 percent this year to 1,091.50 per dollar as of Tuesday (Seoul time), becoming one of the best-performing Asian currencies.
The won's appreciation has been driven by South Korea's trade surplus, improvement in credit ratings, and easing of monetary policy in the United States.
Moody's Analytics, headquartered in New York, also expressed optimism for South Korea's trade amid a shift in global demand for technology gadgets.
"Asia's exports still feel the pinch from a synchronized slowdown in the U.S., Europe and China, but the pain appears to be near an end," said Matthew Circosta, an economist at the research division of Moody's Corp.
"The global tech cycle appears to be turning upward, but a shift in consumer taste for gadgets is having a mixed effect on Asia's tech producers," he added. "Demand for mobile devices outpaces that for personal computers."
The booming sales of new smartphones and tablets would give a boost to key component producers in South Korea, but sagging demand for hard-disk drives and semiconductors is a setback to Japanese, Singaporean and Thai producers, he said.