Korea to Beat Japan in Trade Surplus

Korea's trade surplus is likely to overtake that of Japan this year for the first time ever, the Ministry of Knowledge Economy said Wednesday.

The nation's trade surplus during the first 10 months of this year amounted to $34.6 billion, and the ministry expects it will surpass the $40 million mark by the end of the year.

In contrast, Japan recorded an $11 billion trade surplus during the January to September period. As its trade balance has been on the rebound in the second half, the country's overall surplus this year is expected to be around $20 billion.

The growth in the competitiveness of Korean manufacturing industries contributed to the country's strong performance, but the weak won was the biggest factor, the ministry said.

From January to September, the Korean currency stood at an average 1,312.7 won to the U.S. dollar, a significant depreciation from 1,012.6 won a year ago.

Japan, however, struggled with the strong appreciation of the yen, which climbed against the dollar from 100 yen per greenback in April to around 90 yen these days.

Under the influence of the global economic downturn, which eroded Japan's domestic consumption by some 17.5 percent, the strong yen dealt a severe blow to the country's outbound shipments. Japan's car exports this year have plummeted 57 percent from a year ago.

"Korean products were more easily affordable in overseas markets as the won remained relatively low, and steady profits from leading local makers and industries also contributed to the overall showings," a ministry official said.

Diversified export items targeting various markets, including emerging ones, also helped Korea deal with the financial crisis that swept through most industrialized countries, he added.

Most Japanese electronics makers cut their investments during the economic downturn, but Samsung Electronics maintained its strategy of "selection and focus" for such items as semiconductors and liquid crystal displays to surpass major Japanese rivals in operating profit in the third quarter.

Forecasts, however, differ over whether Korea can keep the streak going next year.

Kang Myung-soo, an official of the ministry's export-import department, said Korea is likely to keep its edge over Japan, even though the gap is expected to narrow.

Oh Moon-seok of the LG Economic Research Institute, however, said, "Things will be different because changes in exchange rates play a significant role in deciding the export performances of both countries."