(Updates throughout and adds inflation data, comments from
minister and economist)
By Jihoon Lee and Choonsik Yoo
SEOUL, March 21 (Reuters) - South Korean exports tumbled
for the first 20 days of March and producer inflation eased last
month, data showed on Tuesday, reinforcing expectations the
central bank will not raise interest rates further amid current
market turbulence.
Asia's fourth-largest economy contracted last quarter for
the first time in 2-1/2 years hurt by a slowdown in global
demand for its exports and high household debt.
The country's shipments for the first 20 days of March fell
17.4% from the comparable period of last year even though there
was one more working day this year, led by a whopping 36.2% dive
in sales to China, customs agency data showed.
Bank of Korea data earlier in the day showed the producer
price index (PPI) in February was 4.8% higher than a year
earlier, with the pace of increase slowing for an eighth
consecutive month.
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 the economic growth
will be so-so in the future, and now the overseas banking sector
crisis will eventually have an impact here," 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 Feb. 23, ending a year of
uninterrupted rate increases to fight inflation. It next meets
on April 11.
The liquidity troubles at U.S. and European banks have
sharply increased the volatility in financial markets, and South
Korea is also worried about the indirect effects from the
turmoil.
"The government is closely watching the situation as
volatility in global markets has increased in relation to the
failure of Silicon Valley Bank and the liquidity crisis at
Credit Suisse," Minister for Trade Ahn Duk-geun said while
presiding over a meeting on exports.
(Reporting by Choonsik Yoo; Editing by Muralikumar Anantharaman
and Jacqueline Wong)
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