Saturday, May 03, 2008

South Korea 2008: Bad News for Trade Surplus

South Korea is one of the richest countries in Asia and it has a very strong and vibrant economy. It is more than a decade when South Asian economy suffered a lot during 1997 Asian economic crisis. In ten years, South Asian economy has amazingly bounced back. In 2007, company that trade surplus of the country was 14.6 billion dollars. However, 2008 does not seem to be a very rosy year when it comes to trade surplus. Korean government is expecting that this year the economy of the country will grow at 6 percent.

Yoo Choonsik wrote:

Shin also said the government's 2008 economic growth target -- set far above market expectations at 6 percent -- was not unrealistic, although he conceded it may be difficult to achieve under current conditions of a slowing global economy and sharply rising prices for food and energy.

"The situation is now that we can't expect a sharp drop in oil prices, and so the trade surplus in 2008 will probably fall sharply to around $7 billion from last year's $14.6 billion," Shin said in an interview of the Asian Development Bank's annual meeting, held this year in Spain.

This is the not bad, but when you compare with India and China this is a bit slower. However, the main problem Korea is facing at this moment is that the price of oil in international market is increasing and this creates a lot of pressure for the country. In fact, South Korea imports totally imports all of its oils and it does not have any energy source. This is not a good thing for any country in this age. So, another problem is that the country does not invest any money on the alternative energy resources. The Korean people love to have a very consumer and luxurious life. So, it is creating a lot of pressure on the economy and it is hearting foreign trade of the country. In fact, this year it is expected that the trade surplus will become half and will become just nearly seven billion dollars.