The eurozone’s fiscal troubles could seriously hurt South Korea’s exports and cause a slow down in economic growth, a private think tank said Thursday.

The Hyundai Research Institute said persistent fiscal troubles facing European Union countries such as Greece are affecting worldwide trade.

“If the EU cuts back on imports, this will have direct bearing on South Korea and could even cause a hard landing for the country’s exports,” it said.

Europe accounted for 9.5 percent of South Korea’s trade last year, with exports reaching $55.7 billion. The total rises to around $69.3 billion if indirect shipments going through the United States, China and other countries are tallied.

South Korea’s outbound shipments contracted for the second straight month in April, mainly due to a drop in overseas demand triggered by eurozone woes and sluggish growth in the United States and China.

HRI said if Europe’s imports fall by 20 percent, exports by Asia’s fourth largest economy will drop $12.8 billion, while a 30 percent reduction could result in shipments diving $20.7 billion.

It said ship exports will be hit the hardest since the continent accounts for 19.7 percent of all sales by local yards.

Shipments of information technology and autos may also be affected.

The think tank added that Seoul needs to closely monitor developments taking place in Europe and set up strategies to best cope with sudden changes. 

(Yonhap News)