Around the world, countries that were once expected to experience an explosion of growth are now hitting a plateau as global manufacturing demand declines. Both the BRIC’s and the Four Asian Tigers are all revising their growth forecasts as sovereign debt crises continue in Europe and soon in the US. CNN reports on the current stall of the once very promising South Korean economy:
South Korea’s economic growth rate fell in the second quarter to its lowest level in nearly three years as export markets struggled and consumer sentiment flagged.
The Bank of Korea on Thursday said annualised growth slowed to 2.4 per cent in the three months through June, the weakest rate since the third quarter of 2009. On Wednesday, the government said the country’s main index of consumer confidence had fallen to its lowest level in five months.
Slowing export growth is a major reason for the pressure on South Korea’s growth rate. Economic expansion in China, the country’s biggest foreign market, is easing, while economic uncertainty in the US and the EU is holding back exports to those regions despite recent trade agreements.
Exports grew by an annualised 3.2 per cent in the quarter, but declined by 0.6 per cent from the previous quarter, with particularly weak exports of steel and petrochemical products. Fixed investment fell in both construction and facilities, by 1.4 per cent and 2.9 per cent respectively.
The data mean that South Korea will need a significant pickup in growth in the remainder of this year to meet the BoK’s annual growth forecast of 3 per cent. Earlier this month, the bank lowered its forecast by 50 basis points, but economists say the current target is still too optimistic.