Korea’s economy in vicious cycle

South Korean economy is experiencing a vicious cycle with its wobbling exports, a last resort for the nation’s economy. Falling exports drive down the current account surplus, which, in turn, causes the won to depreciate, boosting export competitiveness and as a result leading to export volume growth.

However, the recent drop in exports in Korea, reflected in lagging corporate performance, resulted in slowing domestic consumption and the subsequent expansion of current account surplus. Then, the won climbed, which, in turn, hurt exports, and as a result shrank the economy further.

In response to the shrinking economy from worsening exports, the government intends to implement countermeasures by late June.

According to the Ministry of Strategy and Finance, the Ministry of Trade, Industry and Energy and Bank of Korea, current account surplus for this year is forecast to record $96 billion, setting a fresh high from last year’s $89.2 billion. However, ‘surplus during recession’ is becoming more apparent as the surplus is growing due to a sharper fall in imports than exports.

In actual fact, the current account surplus for March came to $10.3 billion, the third highest on a monthly basis. In April, exports slid twice faster than imports, with exports down 8.1 percent from the same period a year ago and imports by 17.8 percent.

korean-electronics.com | Blog Magazine of korean electronics, brands and Goods

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