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Economic slowdown expected as export shrinks, recovery of domestic consumption slows: Finance Ministry

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Financial authorities expect Korea's economic slowdown to continue into this year.
The main factors, they say, are shrinking exports and a sluggish recovery in domestic consumption.
Our financial correspondent Lee Rae-hyun explains further.

The South Korean economy is likely to keep slowing down in the new year, according to a report Friday from the Finance Ministry.
It said the recovery in domestic consumption is slowing down, exports are shrinking, and inflation is likely to remain high.
This forecast is more negative than last month's.
The phrase "concerns over an economic slowdown" has now appeared in the report for 8 months in a row.

"Monetary tightening and COVID-19 in China are creating greater uncertainties. Slower growth in major countries and the war in Ukraine are also creating risks."

The ministry said one of the main factors is exports.
South Korea's exports last month dropped 9-point-5 percent compared to the same period a year earlier, down for a third month in a row.
This resulted in a 9th straight monthly trade deficit.
So far this month, as of Tuesday, the deficit with China is more than 1-point-8 billion U.S. dollars.

"The trade deficit with China is expected to continue due to sluggish exports of semiconductors. Demand for semiconductor equipment is dropping there, which will eventually lead to a drop in South Korea's exports. Exchange rates are also contributing."

Consumer prices in December were up 5 percent on-year.
Inflation has been steadily coming down since it reached its peak in July largely due to a drop in the price of gasoline.
But still, inflation's been above 5 percent since last May.

The recovery in domestic consumption is also weakening.
In November last year, production in the service sector dropped zero-point-6 percent on-month while retail sales also fell 1-point-8 percent.
Meanwhile, the Bank of Korea on Friday predicted economic growth for this year to come in below 1-point-7 percent.
It also said it expects consumer inflation to slow down to the mid-3-percent range.
Lee Rae-hyun, Arirang News.


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2023-01-13, 21:00 (KST)