Letter of credit (L/C) arrivals in Korea declined sharply in July compared with the same month in 2001, once again casting doubts over a long awaited resurgence in demand for Korean manufactured goods in world markets.

According to the Bank of Korea, export L/C arrivals stood at US$3.77 billion in July, a huge decrease of 24.9 per cent compared with ago.

Downward trends

Export L/C arrivals - which account for 30-40 percent of trade-settlement transactions - are viewed as a barometer for forecasting export trends in the coming months.

Export L/C arrivals in March peaked at US$4.32 billion, down 18.6 per cent from March 2001. Falls this year compared with the same months in 2001 were recorded as 7 per cent to US$4.32 billion in May and 17.6 per cent to US$3.77 billion in June.

Questionable barometer

Korea is one of a handful of countries that uses L/C arrivals as a barometer for future economic performance.

Some economists now say however that the accuracy of this method of forecasting should be questioned. It does not take into account possible changes in payment habits, notably from L/C to open account payments.

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