Exports likely to fare poorly in 2nd half

The outlook for the nation`s exports in the second half of this year is looking increasingly bleak.

The Korea International Trade Association (KITA) expressed these concerns in a report on Korea`s export competitiveness Tuesday. The report stated that despite the country`s growing share in major export markets such as the U.S. and Japan during the first half of this year, problems such as declining foreign exchange rates and soaring wages will likely take a heavy toll on its export competitiveness in the second half.

Following a year-on-year drop of 15.2% in 1999, the sharpest decline among the world`s major exporting nations, Korea`s foreign exchange rates have continued to plunge. On the other hand, wages in the manufacturing sector, which posted a year-on-year gain of 14.9% in 1999, rose by 13.5% year-on-year during the January-April period this year, sharply weakening the nation`s price competitiveness, the KITA said.

Interest rates have been on a downward curve since the outbreak of the foreign currency crisis, but they remain at a high level compared to those of rival countries, and are thus weighing down the profitability of local firms.

The nation`s exports during the first five months of this year registered a year-on-year increase of 26.9%. The rate was somewhat lower than that of China (36.6%), but higher than those of Taiwan (22.6%), Singapore (19.4%) and Japan (20.3%). The KITA contributed the solid export growth to significantly enhanced price competitiveness and export profitability, which resulted from rising foreign exchange rates and falling wages.