The Korea Herald


Economic slowdown continues on weak exports, inflation weakens: government

By Yonhap

Published : June 16, 2023 - 10:24

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South Korea's finance ministry said Friday that Asia's No. 4 economy has recently experienced weaker inflationary pressure, although it continued to suffer an economic slowdown.

"Recently, the South Korean economy saw its price hikes continue to lose steam. The economic slowdown lingered due to exports and the manufacturing sector," the Ministry of Economy and Finance said in a report.

The growth of South Korea's consumer prices slowed for the fourth consecutive month in May from a year ago, rising 3.3 percent, in yet another signal that the country's inflation has passed its peak.

Exports fell for the eighth consecutive month in May, decreasing 15.2 percent on-year. The decline came as exports of semiconductors, the country's key export item, sank 36.2 percent on falling demand.

The ministry mentioned an economic slowdown in the monthly assessment report, the Green Book, for the fifth consecutive month.

"However, following the gradual recovery in domestic consumption, improved economic sentiment, and the strong job market indicates the downward risks have been eased to some extent," it added.

South Korea's job additions slowed for the second consecutive month in May following a brief rebound in March amid lingering economic uncertainties, but the employment rate nevertheless reached a fresh high.

In terms of external factors, the South Korean economy is grappling with uncertainties driven by external factors, particularly the tightening global monetary policies and the prolonged conflict between Russia and Ukraine.

On a positive note, the reopening of the Chinese economy and the growing optimism surrounding the global information technology industry are expected to provide support to the South Korean economy, it added.

Last week, the Organization for Economic Cooperation and Development lowered its 2023 growth outlook for South Korea to 1.5 percent, citing weak exports and sluggish private investment.

In May, the Bank of Korea also slashed its growth outlook for South Korea to 1.4 percent from the 1.6 percent expansion predicted three months earlier.

The central bank held the benchmark interest rate steady for the third straight time last month at 3.5 percent on easing inflationary pressure amid rising concerns over an economic slowdown. The bank delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023. (Yonhap)