South Korea warns of deepening economic slump

Asia’s fourth-largest financial system is broadly anticipated to see progress fall beneath 2 % subsequent yr.

South Korea has warned of a deeper financial slowdown than anticipated subsequent yr [File: Ahn Young-joon/AP]

South Korea has warned of a deeper financial slowdown than anticipated subsequent yr, extending gross sales tax breaks on some gasoline oil merchandise and passenger vehicles by just a few months.

“Our financial system’s progress is anticipated to gradual subsequent yr as a result of results from a world financial droop, and the problem shall be targeted on the primary half,” Finance Minister Choo Kyung-ho stated on Monday at a gathering with the ruling get together management, including the financial system was slowing at a extra fast tempo than anticipated.

The federal government is anticipated later this week to announce its financial coverage methods for subsequent yr, which would be the first full-year assertion for President Yoon Suk-yeol’s administration since its launch in Could.

South Korea’s financial system, the fourth-largest in Asia, depends closely on exports starting from vehicles and ships to chips and smartphones. It's broadly anticipated to see progress fall beneath 2 % subsequent yr, down from shut to three % this yr.

The central financial institution final month minimize its projection for subsequent yr’s financial progress to 1.7 % from the earlier 2.1 % in its scheduled revision, citing falling exports and the resultant discount probably in company funding.

Because the financial system has now to rely extra on home consumption to offset cooling export demand, the finance ministry has prolonged by as a lot as six months tax breaks on gasoline oil merchandise and passenger automotive gross sales past their authentic end-2022 expiry.

The ministry is because of unveil its 2023 financial projections and techniques on Wednesday.

President Yoon, struggling towards low approval scores, says exports are the only option for the manufacturing-heavy nation to beat its droop.

China, South Korea’s prime export market, is going through its personal issues as its financial system feels the impact of years of strict controls to struggle COVID-19.