People shop for groceries at a supermarket in Seoul on Feb. 15, 2023 (Yonhap)
SEJONG, Feb. 17 (Korea Bizwire) — South Korea’s finance ministry said Friday the country’s economy has slowed amid higher inflation and sluggish exports.
“South Korea’s inflation remains at a high plateau, and domestic consumption recovery is slowing down. A persistent slump in exports and deteriorating business sentiment indicate an economic downturn,” the Ministry of Economy and Finance said.
The finance ministry had been mentioning the possibility of an economic slowdown in its monthly economic assessment report, called the Green Book, since June last year.
“(Since June), South Korea’s exports have been sharply losing ground, and recently, even consumption started to slow,” Lee Seung-han, the director of the ministry’s economic analysis division, said during a press conference.
It marked the first time for the ministry to assess that the economy has slowed since the country gradually recovered from the aftermath of the COVID-19 pandemic.
In January, the country’s trade deficit reached a monthly record high of US$12.69 billion, marking the 11th straight month of losses, primarily due to soaring energy costs. South Korea is highly dependent on energy imports.
Consumer prices, a key gauge of inflation, rose 5.2 percent in January from a year earlier, compared with 5 percent growth estimated in December. Inflation rose by 5 percent or higher for the ninth month in a row.
“Externally, there are hopes over the reopening of China, and the soft landing of the global economy,” the report said.
“Uncertainties (however) linger due to the monetary-tightening moves and concerns over the prolonged war between Russia and Ukraine.”
South Korea’s economy is estimated to have grown 2.6 percent on-year in 2022, slowing from a 4.1 percent gain the previous year, the central bank’s data showed last month.
The finance ministry expects the country’s economy to grow 1.6 percent on-year in 2023 as it braces for the impact of global monetary tightening moves.
(Yonhap)
