Korea takes extra stimulus step as Asian exporters seek relief

Mon Sep 10, 2012 7:01am EDT
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By Choonsik Yoo and Se Young Lee

SEOUL (Reuters) - South Korea announced an incremental stimulus package on Monday to nurse its export-driven economy through prolonged hard times, a move many Asian governments are expected to follow as Europe slides towards recession and the United States struggles to grow.

Unable to do anything about their shrinking external markets, regional policymakers are looking at bolstering the domestic side to ensure their economies have a soft-landing.

The $5.2 billion package trumpeted by Seoul was a follow-up to measures totaling $7 billion unveiled in late June. Together they are equal to about 1 percent of GDP for Asia's fourth largest economy, hardly enough to set pulses racing.

Taiwan, another exporter struggling against a drop in demand for high-tech gadgets, is expected to announce some investment incentives for the private sector on Tuesday, having notched a sixth straight month of contraction in exports in August.

As worrying as sliding growth rates may seem, most Asian economies are nowhere near the critical situations seen elsewhere in the world, and policymakers have been cautious about their next steps.

"The growth slowdown has been incremental and it's all being met with incremental policies," said Nigel Chalk, managing director of research for emerging Asia at Barclays.

"It seems like they probably would do more if it was a big negative shock but right now you don't see that, just a steady slowdown everywhere."

Everyone is waiting for some extra stimulus measures from China, after a flood of grim-looking data over the past two days has raised the clamor for something to be done to halt the world's second-largest economy's loss of momentum.   Continued...

A truck is driven down a road at a yard where cars are parked before being exported at a port in Incheon, west of Seoul June 17, 2012. REUTERS/Choi Dae-woong