As inventories of imported goods dwindle, especially stocks of components needed to manufacture export products, those surpluses could narrow or disappear. That could start in the next few months, he suspects. And whether easier monetary policy helps remains in question. Certainly lower interest rates and greater banking-system liquidity ought to make it easier for companies to borrow money. But the situation is not so simple.
Banks burdened by bad loans remain unable to lend.
If interest rates come down too far, risk-averse depositors could pull out their funds in search of better returns elsewhere. And even in Korea, where rates have fallen and banks are flush with liquidity, only the biggest and most credit-worthy borrowers are getting access to funds. Smaller companies, who need the money the most, remain cut off. Then there is the question of where the money for stimulus measures will come from. With domestic funds tight, governments are turning to sovereign borrowing.