Letter of credit (L/C) arrivals in South Korea plummeted to just US$3.09 billion, down 30 per cent compared with the same period last year, according to the Bank of Korea.

The record fall in L/C arrivals is the steepest recorded by the central bank since it began compiling trade statistics in 1968. The bank said the fall was related to the shortfall in the number of working days last month.

The spectacular fall in L/C arrivals confirms the views of economic forecasts that point to strong domestic growth dragged by poor international trade figures. In its latest released statement, the Korea Economic Research Institute (KERI) said that in spite of strong domestic sales it expected Korea's estimated growth rate for 2002 to be about 4.6 per cent, due to slow growth in the exports and investments sectors.

The institute also expects a 3.5 per cent increase in consumer prices index, while the current account balance is expected at US$3.5 billion in the black. KERI's 4.6 per cent growth estimate is up from its previous target of 3.6 per cent made December 2001 as according the forecasters, the US economy looks as if it may recover earlier than expected.

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