S. Korean Export Growth Seen Accelerating; Consumer Prices Rose

South Korea's export growth probably accelerated in January on increased sales of chips and other goods. Consumer prices likely rose this month.

Overseas shipments gained 19.7 percent from a year earlier after rising 13.8 percent in December, according to the median estimate in a Bloomberg News survey of 15 economists. Consumer prices gained an unadjusted 0.6 percent from November, the survey showed. Trade figures will be released at 10 a.m. tomorrow in Seoul and the inflation report is due at 1:30 p.m.

Overseas shipments, which make up 40 percent of the economy, have stoked the longest expansion in a decade in Asia's third- largest economy as consumer spending has cooled. An acceleration in exports may help economic growth strengthen from the slowest annual pace in 1 1/2 years in the fourth quarter.

``Exports are likely to stabilize after being weak in December,'' said Oh Suktae, an economist at Citibank Korea Inc. in Seoul. ``A recent decline in crude oil prices would affect import data from February.''

Overseas shipments may also have risen compared with a year earlier because there were more working days this year than in 2006, when the Lunar New Year holidays fell in January.

South Korea's $788 billion economy expanded 4 percent in the fourth quarter from a year earlier, the slowest pace since the second quarter of 2005, as consumer spending slackened, a central bank report showed last week.

Export growth may slow later this year as the global economic expansion cools, cutting demand for Korean products and a stronger currency erodes the value of overseas sales.
Exports will probably increase 10.4 percent in 2007, the smallest gain in five years, the Commerce Ministry said Jan. 3.

Inflation Report
Tomorrow's prices report will probably slow annual inflation eased. Consumer prices increased 2 percent in January from the same month in 2006, slowing from December's 2.1 percent gain, the Bloomberg survey showed.

``Prices seem relatively stable,'' said Ryu Seung Sun, an economist at Mirae Asset Securities Co. in Seoul. ``The government said it will refrain from raising public charges and oil prices are falling.''

The annual inflation rate will average 2.7 percent this year, according to a government forecast. South Korea's central bank aims to keep gains in the consumer price index between 2.5 percent and 3.5 percent.

Consumer prices will be ``relatively stable'' this year, helped by a decline in the costs of crude oil and raw materials, the Finance Ministry said on Jan. 26. The government will try to minimize increases in public charges, such as bus and train fares or utility costs, the ministry said.

Oil Prices

The price of Dubai crude oil, South Korea's benchmark, has fallen more than 15 percent in the last six months of 2006. South Korea imports all of the fuel it uses.
The Bank of Korea increased the benchmark overnight call rate in three quarter-point moves to 4.5 percent, a five-year high, in 2006 to stem inflation.
The central bank left rates unchanged the past five months, most recently on Jan. 11, amid signs of slowing economic growth.
source:www.bloomberg.com