South Korean economy records lowest growth in 3 years

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 policy.

According to preliminary data from the Bank of Korea, South Korea's gross domestic product (GDP) in 2023 is expected to grow 1.4%, 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 the global economic downturn and aggressive monetary tightening by the US 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% rate 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% rate.

According to the BOK 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 Korean economy will grow 2.3% in 2024.

Asia's fourth-largest economy has been on track to recover since shrinking 0.3% in the fourth quarter of 2022 due to tightening monetary policy by 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 made seven consecutive rate hikes from April 2022 to January 2023.

Minh Hoa (reported by Hanoi Moi, Bnews)

Source: https://www.nguoiduatin.vn/kinh-te-han-quoc-ghi-nhan-muc-tang-truong-thap-nhat-trong-3-nam-a647446.html