Seoul - South Korea's economy showed some signs of strain Friday, as the nation's carmakers reported dropping sales against the backdrop of the country's first trade deficit since 1997. Slowing global consumption weighed heavily on the nation's carmakers. Hyundai Motors, Kia Motors, GM Daewoo Auto & Technology, Renault Samsung and SsangYong Motor reported a combined 13.1 per cent year-on-year reduction in sales for December, with 319,123 cars sold.
Exports dropped 9.8 per cent while domestic sales crashed by 23.2 per cent.
South Korean industry leader Hyundai suffered a moderate drop-off in comparison to its peers, with sales only falling 2.4 per cent versus the previous December. Nonetheless, the company opted not to make sales forecasts for 2009.
Overall, the five companies saw a 2.4 per cent rise in overall 2008 sales of 5.35 million cars.
The drop-off in December's car sales jibed with official reports of the country's trade deficit, brought on when exports nosedived in November and December due to shrinking foreign demand.
Exports in 2008 grew 13.7 per cent to 422.4 billion dollars, the sixth year double-digit growth in a row, despite a sharp drop in the last two months of the year. Imports rose by 21.5 per cent to 435.4 billion dollars, leading to a trade deficit of 13 billion dollars, the Economy Ministry said.
In December, exports dropped by 17.4 per cent to 27.3 billion dollars year-on-year, after dropping by 19 per cent in November. Imports fell by 21.5 per cent to 26.6 billion dollars.
The ministry expects only a 1-per-cent export growth rate for 2009, the slowest rate in eight years. Imports are forecast to drop by 4.7 per cent.
The deficit was mainly caused by price hikes in oil, commodities and other industrial goods, the ministry said. South Korea's main exports are petrochemicals, cars, semiconductors, machinery, ships and consumer electronics such as mobile phones and flat screen televisions.
South Korea's central bank predicted a 2-per-cent growth rate for 2009, after 3.6 per cent the previous year. However, a number of experts predict the economy will contract for the first time since the Asian economic crisis in the 1990s.
