South Korea is showing signs of an economic slowdown, as its manufacturing industry is losing momentum in the wake of slowing exports.
“Investment sustained high growth (in November), but exports tumbled on lackluster external demand, implying that economic activity is losing steam,” the Korea Development Institute (KDI) said in its monthly report.
South Korea’s finance ministry said last month Asia’s No. 4 economy is anticipated to see a 4.5 percent fall in exports this year on a global economic slowdown and weak chip prices, Yonhap News Agency reported.
“On the production side, despite the rebound in automobiles, the manufacturing industry exhibited a decline led by increased losses in most items, and the growth in the service industry moderated,” it added.
Industrial production edged up 0.1 per cent on-month in November, turning around from a 1.7 per cent decrease posted in October, the data from Statistics Korea showed earlier.
The output from the automobile sector jumped 9 percent over the period. The growth, however, was limited, as production from the chip industry slipped 11 percent amid the weak global demand.
The KDI pointed to growing uncertainties in the financial market as well as the protracted war between Russia and Ukraine.
“Downward pressures are expected to intensify as the impact driven by rate hikes at home and abroad gradually ripples through the real economy,” the KDI added.
The Bank of Korea has hiked its benchmark policy rate by a combined 2.75 percentage points since August 2021 to the current 3.25 percent to bring inflation down.