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Financial sector less contributing to GDP: research

All Headlines 15:07 September 19, 2016

SEOUL, Sept. 19 (Yonhap) -- South Korea's economy has become less dependent on the financial sector over the past several years despite the latter's growth in size, a study showed Monday.

The financial industry's output accounted for only 4 percent of the total output of the country's economy in 2014, down from 4.7 percent in 2007, according to National Assembly Research Service.

Financial sector less contributing to GDP: research - 1

The findings, based on the analysis of the Bank of Korea's data, mean the financial industry has contributed less to the gross domestic product of Asia's fourth-largest economy since the global financial crisis amid a slow economic recovery and drawn-out low interest rates.

In 2014, the total output of South Korea's entire industry came to 3,564 trillion won (US$3,188 billion). That of the financial sector amounted to 142 trillion won.

Also, the total added value recorded 1,354 trillion won in 2014 and 75 trillion won, or 5.6 percent, was from the financial field. It marks a 1.2 percentage point drop from 2007.

"The decline of the financial industry's portion represents that its role in the domestic economy has dwindled due to shrinking financial activities," the institute said. "It's also because of worsened profitability of the financial industry attributable to the lackluster real economy and continued low interest rates."

In the survey of national competitiveness by the International Institute for Management Development (IMD) in Switzerland, in fact, South Korea's finance ranked 37th among 61 countries this year, six notches down from a year earlier.

"Compared with other industries, the impact of the financial industry to the gross domestic product and its ability to create jobs are relatively high," Cho Dae-hyung, the author of the institute's related report, said. "Given such economic contributions, the (South Korean) financial industry's new role is needed."
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