The Strategist

South Korean economy slows down to 10 years-low

12/02/2019 - 09:07

The country's authorities lowered the forecast for GDP growth in 2019, noting a deterioration in export dynamics and a reduction in capital expenditures in several sectors of the economy.

The Central Bank of South Korea announced that interest rates remained at a record low for the country of 1.25%, while the forecast for GDP growth rates for the year was reduced to 2%. For the South Korean economy, this is the minimum GDP growth rate since 2009.

In the comments, the central bank noted a slowdown in investment in the construction sector, as well as capital costs of companies in general.

The main negative factor for the South Korean economy remains the US-China trade war: many South Korean companies focused on foreign markets have experienced a serious decline in demand for their exports amid a cooling of the PRC economy and the global economy as a whole. In October of this year, South Korean exports fell by 14.7% compared with October 2018.

An additional negative factor was also the aggravation of relations between South Korea and Japan. In particular, the Japanese authorities limited the supply of materials used in the manufacture of smartphones.