International credit rating agency Moody’s said on Aug. 26 that the ongoing trade disputes between South Korea and Japan are likely to have a greater negative impact on South Korea than on Japan.
“In spite of the South Korean government’s expansionary fiscal policy, South Korea’s annual economic growth rate is estimated to stand at 2.1 percent this year and 2 percent next year, which is significantly lower than 3 percent as the average for the past five years,” it said in its recent report, lowering its growth forecast again in just five months.
The pessimistic prediction is rooted in the trade disputes above anything else. The Japanese government is planning to implement tightened export restrictions against South Korea, which will be applied to etching gas, photoresist and fluorine polyimide, on Aug. 28.
Moody’s forecast that the export curbs will adversely affect South Korea’s exports and manufacturing sector. “The disputes are likely to have a negative impact on the short-term economic growth forecasts of South Korea and Japan alike,” it said, adding, “Although Japan is also being affected by the boycott of travel to Japan and Japanese products that is going on in South Korea, South Korea’s worsening intermediate goods trade is a risk bigger than that.”