South Korea is expected to suffer a trade deficit for a second straight year in 2009 mainly due to declining exports amid the global economic recession, Yonhap News reported quoting a government report Wednesday.
According to the report submitted to parliament last week, South Korea's trade deficit will amount to $5.6 billion next year. Exports and imports were estimated at $490 billion and $495.6 billion, respectively.
South Korea is likely to post a trade shortfall of around $9 billion this year, the first red ink since 1997 when the nation was hit by an Asia-wide financial crisis.
"The global economic recession will lead to a decline in overseas demand, which will surely affect our export-driven economy," a finance ministry official was quoted as saying.
In the report, the government also revised down its private spending projection from an earlier 4.5 percent growth to 2.5 percent for next year, reflecting the latest economic conditions at home and abroad.
The adjustment comes as South Korea is gripped by growing jitters that prolonged financial instability stemming from the U.S. could send the global economy into a recession.
Exports, the backbone of South Korea's economic growth, have taken a hit from the global financial turmoil.
In the first 10 days of this month, exports plunged 26.3 percent to $9.87 billion from the same period a month before, government sources showed. If the decline continues, it will mark the first monthly contraction in exports since September last year.
According to latest figures, October exports expanded 10 percent from a year earlier to $37.8 billion but decelerated from a 22.9 percent gain a year ago.
Earlier, the central bank said South Korea's gross domestic product expanded 0.6 percent in the third quarter of this year from three months earlier, the slowest rate in four years.
The Finance Ministry recently lowered its 2009 growth projection to 4 percent from an earlier 5 percent.