The International Monetary Fund (IMF) said that the decline in Korea’s economic growth rate for four consecutive times was due to a combination of deteriorating semiconductor industry conditions, slowing consumption, and a slump in the real estate sector following interest rate hikes.
On the 13th (local time), IMF Asia Pacific Director Krishna Srinivasan responded to a Dong-A Ilbo reporter’s question, “Why did Korea lower its growth rate for the fourth consecutive time despite China’s reopening?” at a press conference in Asia that day. this is getting worse South Korea is a major player in the semiconductor industry, so it is bound to be affected.” “Along with the impact of exports and investment (decrease), consumption, which surged immediately after the outbreak of the novel coronavirus infection (Corona 19), is decreasing,” he said. All of these combined factors are affecting consumption and slowing down the domestic market,” he added.
The International Monetary Fund (IMF) predicted Korea’s economic growth rate this year at 2.9% in January of last year, and then lowered it four times from July of last year to April of this year to 2.1% → 2.0% → 1.7% → 1.5%. On the other hand, Asia’s overall growth rate was 4.6%, 0.3 percentage point higher than the previous forecast, thanks to the recovery of the Chinese economy. In other words, the Korean economy is under greater downward pressure from the semiconductor recession and sluggish domestic demand than the upside factor from China’s economic recovery.
Last month, Gita Gopinath, senior vice president of the International Monetary Fund, said in an interview with the Dong-A Ilbo that “the deterioration of the semiconductor and real estate business, and the trade deficit are compounding the downward pressure on the Korean economy.”
However, the IMF predicted that the impact of China’s economic recovery would begin in earnest in the second half of the year. Director Srinivasan said that the recovery following China’s reopening would have a decisive impact on the Asian market, including Korea.
The IMF maintained its January forecast for China’s growth this year at 5.2%. “The Chinese economy is rebounding strongly, which will provide new momentum to China’s trading partners,” said Srinivasan. The ripple effect will be large,” he predicted. He added that such a ripple effect would appear as a 0.6 percentage point increase in the growth rate of neighboring countries.
When asked about the impact of the US and European banking crisis on the Korean financial sector, Director Srinivasan said, “Korean banks are less exposed to US and European banks (which has been a problem), and the (anxiety) sentiment in the US and Europe is easing.” “The direct impact is limited,” he said. However, he added, “Since risk factors such as rising corporate and household debts are lurking, policy makers in Asia, including Korea, should carefully monitor the market and prepare to immediately implement measures taken by US and European authorities.”
Meanwhile, IMF President Kristalina Georgieva pointed out at the IMF World Bank Spring Meeting that day, “Central banks must address financial risks,” and “keep an eye on banking, non-bank financial, and commercial real estate risks.” The International Monetary Fund (IMF) lowered its global economic growth forecast for this year to 2.8 percent, down 0.1 percentage point from its January forecast. He also warned that if the unrest in the financial sector turns into a complex crisis, such as a credit crunch, falling stock prices, and a rising dollar, the global growth rate will drop to 1% this year.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.