The OECD announced on May 19 that South Korea ranked 21st, with negative 0.3 percent, in the first quarter of this year in terms of quarter-on-quarter GDP growth.
Hungary, Poland, Lithuania and Slovakia topped the list, followed by the United States (0.8 percent). On the other hand, South Korea, Norway, Mexico and Latvia showed a negative quarter-on-quarter growth. Specifically, South Korea and Latvia posted negative 0.3 percent each while Mexico and Norway posted negative 0.2 percent and negative 0.1 percent, respectively. The average of the 21 surveyed OECD member countries is 0.46 percent.
The negative growth of South Korea is attributable to the U.S.-China trade war, Brexit-related uncertainties and domestic economic factors such as a rapid increase in minimum wage. South Korean companies refrained from increasing their investment due to those factors and South Korea’s GDP fell as a result.
The problem is that capital expenditure, which has the biggest impact on GDP growth, is unlikely to rebound in the near future. “South Korean manufacturers are reducing their capital expenditure and this is likely to continue for a while,” the Hyundai Research Institute said in its recent report.