Shrinking Economy
The Bank of Korea announced on July 24 that the real GDP of Korea increased by 0.6 percent in the second quarter of this year, which is 0.1 percentage points lower than earlier estimates. The Sewol ferry disaster and the suspension of business on mobile carriers dragged down the growth rate.
The quarterly growth rate is 0.3 percentage points less than that of Q1, 2014, and 0.4 percentage points less than that of Q2, 2013. Besides, it is the lowest figure in seven quarters, which means the national economy is losing steam this year.
The consumption of goods and services dropped alike in the private sector to show a 0.3 percent quarter-on-quarter drop, whereas the facility investment increased by 1.3 percent thanks to increased investment in transport equipment and machinery. The investment in intellectual property decreased by 4.2 percent as the foreign spending on patent rights decreased. The quarterly exports increased 1.9 percent, led mainly by LCD and chemical products, and the imports increased 0.8 percent.
“The economic sentiment is worsening as seen in the consumer sentiment index for this month,” said Jung Young-taek, director of the Economic Statistics Bureau of the central bank, adding, “It remains to be seen how long it will affect the real economy.”