Chip sales boost Korean exports

Korean chip sales are boosting the economic recovery

The world is buying more and more electronic goods from South Korea, giving the country's economy a welcome boost amid the international doom and gloom.

Strong sales of chips and mobile phone handsets meant that exports in July this year were 19.9% higher than in the same month of 2001 at $13.7bn, way above the 0.1% annual rise seen in June and better even than the most optimistic predictions.

The news comes as a welcome turnaround after 13 straight months of decline ended in April, and will help underpin government hopes that economic growth will double from last year's 3% expansion.

But there are warning signs that the spurt may not last, as imports also accelerated and worries grow about the strength of the recovery in the US, Korea's main export market.

Korean economists are seeing early warning signs from two directions about the strength - or otherwise - of the economy.

First and foremost there is the apparently relentless assault on US and European stock markets as worries about corporate probity have mounted, a concern exacerbated by the latest US growth figures showing a sharp slowdown from the breakneck 5%-plus seen early in the year.

Hand in hand with that is the slide in the value of the dollar, and the consequent appreciation of the Korean won, up almost 12% against the greenback since the beginning of the year.

"Not only a low base but good shipments of chips and handsets powered July's surge in exports," Kim Dong-sun, a senior official at the ministry's exports division, told Reuters. "But prospects for U.S. economy remains considerably uncertain which coupled with exports-crimping strength in (Korean) currency will be the biggest hurdles in the months ahead."