This article talks about South Korea who have recently cut their growth forecast for the second time in 2 months. They have cut down from a 3 % growth to a 2.3 %. This comes after south Koreans economy expanded by only 2 % in 2012 which has been the slowest since three years.
Exports account for a large percentage of the overall output and has been weak because of the slowdown in demand from US and the Euro zone. These exports have also come under pressure from the recent weakness in the Japanese currency, the yen fell 20 % against the dollar and the south Korean won has risen by 10 % making Japanese goods cheaper and affordable to purchase by foreigners.
Exports is not the only thing which has effected growth rates but the fall in domestic demand has had an impact on it. The ministry said that it would unveil stimulus measures to try boost domestic demand.
http://www.bbc.co.uk/news/business-21963610
Exports account for a large percentage of the overall output and has been weak because of the slowdown in demand from US and the Euro zone. These exports have also come under pressure from the recent weakness in the Japanese currency, the yen fell 20 % against the dollar and the south Korean won has risen by 10 % making Japanese goods cheaper and affordable to purchase by foreigners.
Exports is not the only thing which has effected growth rates but the fall in domestic demand has had an impact on it. The ministry said that it would unveil stimulus measures to try boost domestic demand.
http://www.bbc.co.uk/news/business-21963610
I wonder if the recent tensions between North and South Korea has something to do with this. They are obviously responsible for South Korea's drastic increase in defense spending now that North Korea has declared war on South Korea.
ReplyDeleteThat could be a possible reason ,I am not quite sure how much of a role that plays .
ReplyDeleteIf the government provides a stimulus for South Korea to boost growth, will that only further strenghten the currency and have a negative effect on exports?
ReplyDeletePolitical uncertainty can play into lack of consumer confidence and certainly something that will concentrate governments attention on main issue, which is defense buildup. I think that slow European and United States growth also plays into the drop in demand for South Korea's goods. Altogether, South Korea is facing a difficult situation where they have to balance domestic issues with external threats.
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