Economic Slowdown
The Korea Development Institute (KDI), an economic policy think tank that was set up by the government, has officially admitted to a slowdown in the Korean economy.
On Jan. 7, the KDI said, “Our economy appears to be gradually slowing down in general, with recent output-related indicators pointing to a slump.” The institute publicly announced its economic slowdown for the first time in recent years.
The KDI has suggested uncertainties about its economic recovery from the second half of last year. However, it used a term “slump” for the first time, saying “the economy appears to be in slump in general” in the report in Nov. last year.
Last month, the KDI mentioned the term “slow down” for the first time, saying “It suggests that the economic growth is slowing down.” In a month after its negative growth outlook on the economy, the state-run research institute presented the negative outlook, citing “economic slowdown” once again.
The reason why the KDI used the unprecedented term “economic slowdown” is that both domestic demand and exports, the two major pillars sustaining the Korean economy, are showing signs of dropping or slowdowns.
Taking a look at indicators, production in all industries recorded a -0.5 percent increase in Nov. compared to the same period of the previous year, shifting to the drop from a 0.1 percent increase in the previous year.
In particular, in terms of the cyclical fluctuation in the coincident composite index that indicate the economy’s current position, the figure has decreased for three consecutive months, plunging 0.2 points to 99.8 compared to the previous month. The KDI also believes that private consumption in November is in a depression, since the retail sales index shows only small increases. Also, even the increasing trend of exports, the largest pillar of the Korean economy, is gradually slowing down around petroleum products.
Previously, at the end of last year, the KDI forecast 3.5 percent for the county’s economic growth this year, which was 0.3 percentage points lower than the government’s prospects. However, it said that the figure could drop to the lower 3 percent as foreign uncertainties increase.