S.Korea exports drop 17.4% in first 20 days of March

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S.Korea exports drop 17.4% in first 20 days of March

SEOUL South Korean exports fell for the first 20 days of March and producer inflation slowed last month, confirming fears that the central bank will not raise interest rates further due to current market turbulence.

Asia's fourth-largest economy contracted for the first time in 2 -- 1 2 years last quarter, hurt by a slowdown in global demand for its exports and high household debt.

The country's shipments fell 17.4 per cent from the previous year, even though there was one more working day last year, led by a whopping 36.2 per cent dive in sales to China, customs agency data showed.

The producer price index PPI in February was 4.8 per cent higher than a year ago, with the pace of growth slowed for an eighth consecutive month, according to Bank of Korea data earlier in the day.

Economists said these figures confirmed the broad market expectations for weakening economic growth and easing inflation, raising more doubts about the central bank's tightening stance.

Inflation will continue to slow and economic growth will be so in the future, and now the overseas banking sector crisis will have an impact, said Moon Hong-cheol, economist at DB Financial Investment.

South Korea's central bank kept the policy interest rate unchanged at its last meeting on February 23 ending a year of uninterrupted rate increases to fight inflation. The volatility in financial markets has been increased due to the liquidity troubles at U.S. and European banks, and South Korea is worried about the indirect effects of the turmoil.

The government is watching the situation as the volatility in global markets has increased in relation to the failure of the Silicon Valley Bank and the liquidity crisis at Credit Suisse, Minister for Trade Ahn Duk-geun said while presiding over a meeting on exports.