S. Korea's trade surplus shrinks in 2012

South Korea's trade surplus in 2012 shrank 30.6 percent to $28.6 billion in 2012, data showed Tuesday, as exports were hit by shrinking demand in the key European market.

Overseas shipments came in at $548.2 billion last year, while imports dwindled 0.9 percent to $519.5 billion, the the Ministry of Knowledge Economy said.

The 2012 is well down from the $41.2 billion in 2010, it said.

In December alone, exports fell 5.5 percent from a year ago to $45.1 billion and imports retreated 5.3 percent to $43.07 billion, the ministry said.

Shipments to Europe plunged 12.5 percent year-on-year to $47.6 billion, while exports to top destination China, which suffered a slowdown in growth during the year, fell 0.1 percent to $130 billion.

The news comes a day after official figures showed inflation slowed to a four-month low of 1.4 percent in December, giving the central bank leeway to loosen monetary policy to boost economic growth.

Bank of Korea policymakers left the key interest rate unchanged at 2.75 percent in a meeting last month, after trimming it twice throughout the year.

South Korea's economy expanded at its slowest pace in three years in the three months to September, hit by falling demand overseas, with Europe gripped by a debilitating debt crisis, while the government has warned 2013 will likely be equally as tough.