Go to Contents Go to Navigation

S. Korea sees growing signs of economic slowdown amid external risks: KDI

All News 13:43 November 07, 2022

SEOUL, Nov. 7 (Yonhap) -- South Korea has seen increasing signs of an economic slowdown over weakening exports and the sluggish manufacturing sector amid worsening external conditions, a state-run think tank said Monday.

The assessment by the Korea Development Institute (KDI) was bleaker than its outlook made a month earlier that the economy has been on a mild recovery track despite growing downside risks.

"Our economic growth has weakened, particularly in terms of exports, as external conditions have worsened. Indices showing chances of an economic slowdown down the road have risen," the KDI said in a monthly economic assessment report.

In October, the country's exports, a key growth engine, fell 5.7 percent from a year earlier, logging an on-year decline for the first time in two years, according to government data.

Exports of semiconductors, in particular, dived 17.4 percent on-year in October on falling demand and a decline in chip prices, extending their losing streak for the third consecutive month.

"We had maintained an outlook for an economic recovery until last month, but we see that it is not the case anymore," KDI official Jung Kyu-chul said. "The assessment does not mean that South Korea is experiencing an economic slowdown now, but it points to such chances in the future."

The country's industrial output fell in September for the third month in a row, and retail sales and facility investment also lost ground, government data showed.

The Bank of Korea said that the country's business sentiment index (BSI) for October fell to the lowest level in 18 months of 76. The index measures corporate prospects for business conditions in the following month, and a reading below 100 means pessimists outnumber optimists.

This photo taken Nov. 1, 2022, show a port in South Korea's southeastern city of Busan. (Yonhap)

This photo taken Nov. 1, 2022, show a port in South Korea's southeastern city of Busan. (Yonhap)

The KDI also pointed to growing uncertainties in the financial market, as the United States and other major economics have pushed for aggressive monetary tightening to rein in high inflation.

South Korea also experienced jitters in its short-term money market in the wake of a default on a municipal government-guaranteed debt raised to construct the Legoland theme park in the eastern province of Gangwon.

Later this week, the KDI plans to announce its economic outlook. Earlier, it forecast that the Korean economy would grow 2.3 percent in 2023.

The Bank of Korea put the figure for next year at 2.1 percent, and the International Monetary Fund (IMF) cut next year's growth estimate for South Korea to 2 percent from its earlier forecast of 2.1 percent.


Send Feedback
How can we improve?
Thanks for your feedback!