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Bank of Korea in downtown Seoul/Courtesy of Bank of Korea

Economic growth dips to 10-year low

The South Korean government channeled taxpayer’s money to support the country’s economy in the fourth quarter of 2019 when the gross domestic product (GDP) rose 1.2 percent, the highest in nine quarters.

But such fiscal efforts were not enough to boost the moribund private consumption and investments as the country’s economic growth rate dipped to the lowest level since the global financial turmoil a decade ago.

The Bank of Korea announced the preliminary 2019 data on Jan. 22 to show the country’s economy expanded a mere 2 percent year-on-year, the lowest since 0.8 percent in 2009.

The government expenditure jumped 6.5 percent. But investment in construction and facilities went down 3.3 percent and 8.1 percent, respectively.

On a more negative note, Asia’s No. 4 economy saw its outbound shipments rise merely 1.5 percent last year due to the weak chip demand and the protracted trade war between China and the United States.

Korea heavily depends on exports as the country’s trade volume is almost comparable to its national output.

In particular, the slump in the semiconductor market dealt a blow to Korea Inc., home to the world’s leading memory chip producers of Samsung Electronics and SK hynix.

But things are expected to get better a little this year as demonstrated by the strong performances in the final months of last year, according to Oxford Economics.

Today’s solid outcome supports our recent revision to our 2020 GDP growth forecast. We expect GDP to grow 2.2 percent (2 percent previously) as increased fiscal spending amid easing US-China trade tensions will help to support a stronger recovery in investment and exports,” the think-tank said.

Indeed, there are already signs of a pick-up in Chinese demand, the semiconductor sector and investment.”

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