Tuesday, January 14, 2014

South Korea dependent on exports

South Korea rebounded from the most recent recession as exports leaped. Growth has subsided, however, and will probably be held back by the slow recovery in Europe, the slowdown of growth in China, the competitive devaluation of the Japanese yen and a tepid U.S. economy. Industrial production is barely rising. Business conditions continue to be subdued, and the consumer sentiment index has been little changed in the past year.

Dependence on exports, however, has left South Korea vulnerable to global volatility, as was evident from the nose dives in real GDP caused by the 1997-1998 Asian crisis and the 2008-2009 global crisis and its aftermath. The relatively low level of consumer spending, 53.5 percent of GDP in 2012, was inadequate to offset the collapse in exports.