South Korea is showing more signs of economic slowdown amid declining exports


Seoul, 8 Jan. (IANS) South Korea is showing signs of an economic slowdown as its manufacturing industry loses momentum amid slowing exports.

“Investment continued high growth (in November), but exports collapsed on weak foreign demand, implying economic activity is losing momentum,” the Korea Development Institute (KDI) said in its monthly report.

South Korea’s finance ministry said last month Asia’s fourth-largest economy is expected to see a 4.5 percent drop in exports this year on the back of a global economic slowdown and weak chip prices, Yonhap News Agency reported.

“On the manufacturing side, despite the automotive recovery, manufacturing showed a decline, led by higher losses in most items, and growth in the services sector slowed down,” it added.

Industrial production rose 0.1 percent month on month in November, a reversal from a 1.7 percent decline in October, previously published data from Statistics Korea showed.

The output of the automotive sector increased by 9 percent during that period. However, growth remained subdued as chip production fell 11 percent on weak global demand.

The KDI pointed to increasing uncertainties in the financial market and to the ongoing war between Russia and Ukraine.

“Downward pressures are expected to increase as the impact of interest rate hikes at home and abroad gradually feeds through to the real economy,” the KDI added.

The Bank of Korea has raised its benchmark policy rate by a total of 2.75 percentage points since August 2021 to the current 3.25 percent to lower inflation.



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