FALLING EXPORTS, RISING OIL PRICE HIT S KOREA'S BUDDING OPTIMISM.

SEOUL, June 8 Asia Pulse - When the world was buffeted by the financial turbulence following the collapse of Lehman Brothers last summer, there seemed to be no end in sight to a freefall not just for the global economy but also for South Korea's export-driven one.

Frozen domestic consumption, sluggish corporate investment, surging oil prices and fluctuating financial markets all made it tough to predict a quick recovery from what is feared to be the worst downturn in more than a decade.

Fortunately, the mood has been changing significantly in recent months -- at least for the local economy -- as some indicators point to a turnaround and external business conditions improve.

Still, analysts and policymakers are divided over the pace of the economic recovery as exports remain in a deep slump and recently-rising oil and raw material prices are clouding the outlook for Asia's fourth-largest economy.

"One thing is sure that the economy has been bottoming out," said Kwon Soon-woo, a senior economist at Samsung Economic Research Institute, the nation's leading private think tank. "A downturn in economic indicators is coming to a halt, with some of them starting to take a upturn."

Recent indicators are backing up his view. According to the Bank of Korea, South Korea's current account amounted to US$4.28 billion in April, the third straight month of surplus since February, as imports declined more than exports amid a global economic slump.

Industrial output contraction is also easing. Production shrank 8.2 per cent in April from a year earlier, compared with a 10.5 per cent on-year decline in March, the first time that output has fallen by a single digit after contracting 10 per cent or higher over the previous five months.