South Korean exporters saw their first-quarter sales shrink as the impact of the weak yen continued to put them at a disadvantage against Japanese rivals, a report showed Sunday.
The yen has weakened against the U.S. dollar significantly since the fourth quarter of last year, apparently driven by the so-called Abenomics ― a mixture of aggressive monetary and fiscal policies preached by its Prime Minister Shinzo Abe.
A weak yen makes Japanese products less expensive, making them a challenge for South Korean exporters in many fields on the global stage.
According to the report by LG Economic Research Institute, South Korean exporters saw their first-quarter sales drop 1.1 percent on-year. This followed a 1.6 percent fall in the fourth quarter last year, which turned around from a 2.5 percent gain in the third quarter.
The results are based on the analysis of business performances of 60 Korean and 144 Japanese exporters.
During the same period, Japanese exporters saw their sales expand 5.1 percent in the first quarter. Their sales gained 1.2 percent in the last quarter of 2012, bouncing back from a 1 percent fall in the third quarter, the report showed.
The reversal is also evident in their operating profit ratios.
South Korean companies’ operating profit rate stood at 2.2 percent in the first quarter, while Japanese exporters logged a much higher 5-percent rate during the same period.
“The overall economic slump is surely having to do with (the lackluster) business performances, but it is also highly likely that the currency exchange rates, which started to change in earnest from the fourth quarter, are also having a negative impact on the Korean companies,” said Lee Han-deuk, an LGERI researcher who authored the report. (Yonhap News)