According to Yonhap News Agency, on January 25, the Bank of Korea (BOK) announced data showing that the country's economic growth in 2023 was at its lowest level in 3 years due to a decline in exports in the context of countries tightening monetary policies.
According to preliminary data from the Bank of Korea, South Korea's gross domestic product (GDP) will grow 1.4% in 2023, in line with the previous estimate. However, this growth rate is lower than the 2.6% growth in 2022 and 4.3% in 2021; and marks the lowest growth since the 0.7% recorded in 2020 due to the Covid-19 pandemic.
High interest rates, high inflation and a slowdown in the information technology sector have led to a decline in exports and private spending compared to previous years, the BOK said. For the whole of 2023, South Korea's exports are expected to grow 2.8%, down from 3.4% in 2022.
South Korea's exports have started to decline year-on-year since October 2022 amid a global economic slowdown and aggressive monetary tightening by the United States and major economies around the world to control inflation.
Also in 2023, private spending will increase by 1.8%, but still much lower than the 4.1% in 2022. Government budget spending will increase by only 1.3%, compared to 4% in 2022; construction investment will increase by 1.4%, lower than the 2.8% level.
According to the BOK's forecast, South Korea's economic growth will reach 2.1% this year. Meanwhile, the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) also forecast that the South Korean economy will grow 2.3% in 2024.
Asia's fourth-largest economy has been on a recovery path since shrinking 0.3% in the fourth quarter of 2022 due to tightening monetary policy in major countries, escalating geopolitical tensions, rising household debt and a slowdown in China - South Korea's major trading partner.
In early January 2024, the BOK decided to keep its key interest rate unchanged at 3.5% for the eighth consecutive time to maintain the economic recovery momentum. The rate freeze came after the BOK raised interest rates seven times in a row from April 2022 to January 2023.
Minh Hoa (reported by Hanoi Moi, Bnews)
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