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South Korea's Nov export growth slows, inflation eases, rate hikes seen gradual
[SEOUL] South Korea's export growth slowed but still recorded 13 straight months of expansion in November, while inflation eased to the slowest in 11 months, reinforcing views that the new monetary tightening cycle will be gradual.
Shipments grew 9.6 per cent to US$49.7 billion from a year earlier, below 10.2 per cent seen in a Reuters survey and falling well short of the 17.4 per cent monthly average expansion for the year through October, government data showed on Friday.
November on-year inflation at 1.3 per cent was the slowest in 11 months, dropping further away from the Bank of Korea's 2 per cent target and missing the 1.8 percent projected in the Reuters survey.
"There is no chance of policy rate hike in the first quarter," said Lee Jae Hyung, an economist at Yuanta Securities Korea Co.
"Export growth will continue to slow down through early next year as base-effects fade, and inflationary pressure isn't too strong right now. Further tightening moves seem very limited for now," Mr Lee said.
The Bank of Korea (BOK) raised interest rates on Thursday to 1.50 per cent, the first hike for over six years, yet tempered market expectations for more by raising concerns about job market and geopolitical risks.
Friday's data underscores market expectations that the BOK's pull back from a five-year easing cycle will take a gradual path, especially as moderating growth and sub-target inflation would chasten policymakers against rapid rate rises.
Governor Lee Ju Yeol declined to comment at a news conference when asked if he could give any guidance on the near-term direction of monetary policy, simply noting he would closely monitor growth and inflation to assess whether further hikes were needed.
A sustained export boom is behind Thursday's decision to remove the emergency stimulus in force since 2012, as soaring global demand for memory chips boosted corporate earnings at tech giants including Samsung Electronics Co and SK Hynix.
A separate central bank statement on Friday showed the economy expanded 1.5 per cent in the third quarter from three months earlier, the fastest growth in seven years, outperforming the 1.4 per cent expansion estimated earlier.
November imports jumped a 12.3 per cent to US$41.8 billion from a year earlier, faster than 7.9 per cent growth a month earlier.