Harvey Blackwood - South Korea Reports Lowest GDP in 6 Years

Harvey Blackwood - South Korea's economy faces greater slowdown during the course of 2019.

South Korea’s economy faces a growing list of challenges, and this was emphasized when the country reported that it had recorded its lowest annual growth in six years last year.

Although the economy was temporarily propped up by a round of government stimulus in the fourth quarter and grew by more than expected, outpacing the previous three quarters, Harvey Blackwood analysts say the spurt of growth did little to offset an otherwise gloomy outlook for Asia’s fourth-largest economy.

Earlier this week, the Bank of Korea released a report that revealed that South Korea’s economy expanded by 1 percent in the final quarter of last year. Government spending increased by 3.1 percent in the fourth quarter, the biggest increase in almost a decade helping to bolster capital investment and construction.

South Korea’s economy is heavily reliant on trade and with the bitter trade dispute between the US and China - its two biggest trading partners - taking its toll on China’s economy, analysts at Harvey Blackwood fear demand for South Korean export products could be negatively impacted.

In December, South Korean exports to China dipped unexpectedly at the most rapid pace since 2016. Demand from China seems set to decline even further, and South Korea’s employment market is suffering from unemployment figures reaching an 8 year high in August last year.

South Korean President Moon Jae-In raised corporate taxes toward the end of last year in an effort to increase hiring for public jobs and generate more income to spend on public initiatives, but this measure has done little to improve the high rate of unemployment.

Source: Harvey Blackwood

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