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Economic slowdown continues on weak exports, manufacturing performance: gov't

Economy 10:00 May 12, 2023

By Kang Yoon-seung

SEOUL, May 12 (Yonhap) -- South Korea's finance ministry said Friday the country's domestic consumption has been showing a steady recovery, but the economy has continued to slow due to sluggish exports and facility investment.

"Recently, inflation has been slowing in South Korea, with the domestic consumption also posting a rebound," the Ministry of Economy and Finance said in a report. In April, the country's inflation grew 3.7 percent on-year, marking its slowest pace in over a year.

The ministry, however, mentioned an economic slowdown in the monthly assessment report, the Green Book, for the fourth consecutive month, citing weak exports and facility investment.

Economic slowdown continues on weak exports, manufacturing performance: gov't - 1

In April, South Korea's overall exports fell 14.2 percent on-year to US$49.6 billion. Exports have logged an on-year fall since October last year amid aggressive monetary tightening by major economies to curb inflation.

The decline was mostly led by the semiconductor sector, with the price of memory chips falling across the globe amid falling demand and oversupplies.

In March, the country's facility construction investment also fell 2.2 percent and 3.3 percent, respectively.

In terms of external factors, the finance ministry said global uncertainties remain due to the monetary tightening moves coupled with the prolonged war between Russia and Ukraine.

The reopening of the Chinese economy, on the other hand, is a positive factor for Asia's No. 4 economy, it added.

Earlier this week, the Korea Development Institute slashed its growth outlook for the South Korean economy this year by 0.3 percentage point to 1.5 percent, citing slowing exports of chips. The updated figure hovers below a 1.6 percent rise suggested by the Bank of Korea.

The International Monetary Fund expects South Korea's annual growth for this year to be at 1.7 percent, with the Organization for Economic Cooperation and Development and the Asian Development Bank suggesting a 1.6 percent and 1.5 percent increase, respectively.


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