Sluggish Korea

Following the trend from the first quarter (January-March) of this year, Korea remained among the countries with the lowest economic growth rate in the Asian region in the second quarter (April-June) as well.

The difference in growth rate with other countries is only expected to increase as the outlook for the second half of the year is not so positive due to slowed export growth and depressed domestic consumption.

According to the report given by the Bank of Korea (BOK) on October 15, Korea’s Gross Domestic Product (GDP) growth rate for the second quarter was calculated as 5.5 percent while other nations produced much better than Korea; Singapore’s growth rate was 12.5 percent, Hong Kong was 12.1 percent, while Taiwan managed to put up 7.7 percent.

Meanwhile, China and India continued on with their rapid growth with 9.7 and 7.4 percent, respectively. Korea’s growth rate is one of the lowest among Asia’s major competitive nations with the exception of Indonesia which posted 4.3 percent. Japan, as an advanced nation, posted 4.2 percent growth in the second quarter.

Korea’s growth rate lingered at around 5.3 percent during the first quarter as well. On the other hand, China posted 9.8 percent while India managed 8.2 percent of growth, with Singapore, Hong Kong, and Taiwan showing 7.5 percent, 7.0 percent and 6.7 percent, respectively, all surpassing that of Korea’s. Even Japan showed higher growth rate in the first quarter with 5.9 percent.

Mr. Koh Yong-soo, the head of the Economic Team on Asian Continent under BOK, explained, “Asian countries with the exception of Korea showed high growth rates with increased export and consumption, but Korea lagged behind as its exports and domestic consumption came to a halt.”

Experts on the economy forecasted that the difference in growth rate between Korea and other major Asian countries will only become larger in the second half of the year.

Mr. Shin Min-young, a researcher at the LG Economic Research Center, said, “It is highly likely that the growth rate for the second half will drop to the four percent level with poor domestic consumption and slowed export growth.”

Kang-Woon Lee kwoon90@donga.com