Economic Recession
It has been found that the youth unemployment rate in South Korea rose from 8% to 9.3% between July and last month. The latter figure is the highest for August since 1999. The rate had reached 10.3% in June this year, the highest for June since 1999 as well.
Likewise, the number of South Koreans who failed to find a job for at least six months increased from 120,000 to 182,000 between August 2015 and August 2016. The latter figure is the highest for August since 1999, too. Under the circumstances, the ratio of long-term employment rose to 18.27% last month, close to 20% recorded during the currency crisis in August 1999.
Situations as dire as those during the currency crisis are being found here and there. For example, credit rating agencies lowered the unguaranteed corporate bond credit ratings of 159 companies last year, 26 more than a year ago, which means they have to borrow money with more interests. Last year, the number of companies with lowered corporate credit ratings amounted to 160, a 17-year high since the IMF bailout in 1998.
The manufacturing industry is losing steam as well amid a decline in exports and restructuring in various sectors. Last year, the industry recorded a capacity utilization of 74.3%, the lowest since 1998. In the second quarter of this year, the rate dipped down to 72.2%, very close to 71.4% posted in the first quarter of 1999.
Experts point out that the current economic recession is something worse than the recession during the currency crisis because the former is attributable to the lack of a growth driver whereas the latter was due to a temporary impact. “Although foreign exchange-related indices look rather favorable, the current real economic conditions are as dire as those during the crisis,” said Sung Tae-yoon, economics professor at Yonsei University, “Another economic crisis is likely to occur in the form of risks on the real economy side affecting the financial sector.”