Korea'S External Deficit Soars
Bank of Korea figures showed the deficit for the first eight months of the year soared to $15.24 billion, more than double the bank's original projection of a $7 billion shortfall for the whole year.
A central bank official said there was no short-term remedy for the deficit that private economists predicted could hit $20 billion this year.
August's deficit was an increase on the July shortfall of $2.3 billion. It was also bloated by a rising invisible trade deficit, partly the result of a boom in Koreans travelling overseas on holiday.
I'm getting worried, said Kim Gi-hyung, an economist at Daewoo Economic Research Institute. The trade deficit was combining with an economic downturn and the result could be recession, he said.
Lee Young-man, an economist at LG Economic Research Institute, said: Under a worse-case scenario the deficit could reach $20 billion for the whole of this year.
Private economic think-tanks put the whole-year deficit at $18 billion to $20 billion. Last year's shortfall was $8.5 billion.
We are working on the revision for the 1996 deficit forecast. Our figure will not show big differences with that of private economic institutes, said a Bank of Korea economist. The huge deficit is expected to continue next year as there is no short-term remedy to improve it quickly.
However, he added that at $18 billion to $20 billion, the deficit would be still manageable at around three per cent of gross national product. Private economists predict next year's deficit at between $15.2 billion and $18 billion.
Bank of Korea figures showed that international prices of semiconductors, which account for nearly 20 per cent of exports, fell by 72.3 per cent in August year-on-year. Prices for steel products and petrochemical goods dipped by 13.8 per cent.