Government Warns of Economic Slowdown for 7 Consecutive Months: "High Inflation, Weak Exports and Sentiment"

Ministry of Economy and Finance Announces 'December Recent Economic Trends (Green Book)'

[Asia Economy Sejong=Reporter Kwon Haeyoung] The government has issued a diagnosis expressing concerns about the slowdown of South Korea's economy for seven consecutive months.

The Ministry of Economy and Finance stated in the 'Recent Economic Trends (Green Book) for December 2022' report released on the 16th, "Recently, our economy continues to experience persistently high inflation," and added, "The pace of domestic demand recovery is gradually slowing, and with continued sluggish exports and economic sentiment, there are concerns about an economic slowdown."

This marks the seventh consecutive month since the economic trends report released in June first mentioned the economic slowdown. Last month, the report mentioned export 'sluggishness' for the first time, and this month it directly described economic sentiment as 'sluggish.'

[Image source=Yonhap News]

The indicators of economic slowdown are also confirmed by statistics. November exports recorded $51.91 billion, a 14.0% decrease compared to a year earlier. In October, industrial production and retail sales decreased by 3.5% and 0.2% respectively compared to the previous month. Regarding employment, the number of employed persons in November increased by 626,000 compared to a year earlier, but the increase was smaller than the previous month (677,000). Consumer prices also rose by 5.0% in November, remaining at a high level.

Economic sentiment is also rapidly freezing. The Business Survey Index (BSI) representing corporate sentiment across all industries fell to 75 in November from 76 in the previous month, marking the lowest level in 23 months since December 2020 (75). Companies anticipated that the future economic outlook would worsen. The business outlook for all industries in December was recorded at 74, down 2 points from the previous month.

The Ministry of Economy and Finance analyzed, "Externally, market volatility has somewhat eased due to expectations of a slowdown in interest rate hikes and the easing of China's quarantine measures," but added, "Global inflation and uncertainties in the direction of the Russia-Ukraine war continue to pose risks to the world economy." It also stated, "We will make every effort to stabilize the cost of living and the economy, and will thoroughly manage domestic and external risks while enhancing private-sector-led economic vitality such as exports and investment, and accelerate efforts to improve the economic structure."