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Economy of South Korea likely to halt in Q3 2022

Economy of South Korea likely to halt in Q3 2022

Economy of South Korea likely to halt in Q3 2022

South Korea likely to face slow halt in economy in 3rd quarter of current fiscal year

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  • The economy of South Korea is expected to slowly crawl in the third quarter.
  • Faltering exports and rising interest rates knocked the wind out of what had been a strong run.
  • The median projection of 22 economists polled between October 20-24 was 2.8% annual growth.
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The economy of South Korea is expected to slowly crawl in the third quarter as faltering exports and rising interest rates knocked the wind out of what had been a strong run.

According to the median prediction of 21 experts, the export-driven economy was predicted to have increased by 0.1% in the third quarter, a significant decline from the 0.7% quarterly expansion in April-June.

Three economists predicted a complete economic contraction, while two anticipated stagnation.

According to the median projection of 22 economists polled between October 20 and 24, the gross domestic product (GDP) likely grew 2.8% annually, a decrease from the 2.9% annual growth rate predicted for the second quarter.

The information will be released on October 27.

“GDP growth is likely to have been slower in 3Q22 compared with 2Q22, mainly due to the slowdown in consumption. The weakness in exports and manufacturing production is likely to have continued amid the deterioration in the global economic outlook,” noted Oh Suktae, an economist at Societe Generale.

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“GDP growth should remain sluggish, at least in the near term, with consumption growth normalizing from the post-pandemic recovery and the export and investment environments likely to remain weak.”

Exports in Asia’s fourth-biggest economy expanded at the slowest rate in over two years in September, and additional declines are anticipated due to fears of a worldwide recession and a downturn in China, the nation’s major trading partner.

Along with the Bank of Korea’s (BOK) aggressive interest rate hikes to combat decade-high inflationary pressures, this will have a negative impact on the economy. The BOK increased its benchmark interest rate by 50 basis points to 3% in October.

The central bank has increased interest rates by a total of 250 basis points so far in this cycle.

“Looking ahead, weakening export prospects, elevated domestic inflation, rising debt servicing burdens, and tightening policy all point to intensifying growth headwinds,” said Bansi Madhavani, senior economist at ANZ.

According to a separate poll conducted, growth is expected to average 2.6% this year and 1.9% next year.

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