By Jane Han
Staff Reporter
It's a general consensus that the U.S. subprime woes will eventually take a toll on the South Korean economy, but opinion is split on how big a blow the trickle-down effect will deal on the domestic front.
There are optimists such as Finance and Economy Minister Kwon O-kyu, who says a recession in the U.S. won't significantly affect the local market because the world's largest economy no longer takes the lion's share of Korean exports.
``The proportion of U.S. bound exports has halved over the past decade,'' Kwon said Saturday at the G7 meeting in Tokyo. ``This means that less-than-expected negatives will be injected through trade channels.''
The Korea Customs Service said last month that Korean shipments to the U.S. in 2007 were worth $45.8 billion, an all-time low, accounting for about 12 percent of the country's entire export figures.
The data indicated the U.S. has bought less and less Korean goods starting from 1990 when exports to the trade partner took up 29.8 percent of the total. This dropped to 16.9 percent in 2004, and to 12.3 percent last year.
Citing similar reasons, Sakong Il, head of the national competitiveness subcommittee of the Presidential Transition Committee, agreed that the domestic economy isn't as vulnerable as it used to be.
``U.S. exports take up less than 15 percent of the country's trade, meaning that our relationship isn't as intertwined as before,'' he told reporters last month.
However, local economic think tanks have refuted these forecasts, claiming that the U.S. is still the biggest market player in the world with equivalent influence.
``Korean exporters will inevitably get hurt if American consumers start to shy away from spending,'' said Hwang In-sung, a chief research fellow at the Samsung Economic Research Institute, adding that times call for local manufacturers to offer even better positioned choices.
``The main reason the U.S. is buying less Korea-made goods is because neighboring countries are churning out better, more competitively priced products,'' he said.
Song Tae-sung, a research fellow at the LG Economic Research Institute, said although data indicates a fall of direct Korean shipments to the U.S., many local suppliers are selling parts to China and other countries that make the final products.
``This only adds more weight to the thinking that Korean businesses will face a direct impact from the slowing U.S. economy,'' he said.