BCN-08 S. Korea posts worst growth figure for a decade in Q1

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ZCZC

BCN-08

SKOREA-ECONOMY-GROWTH

S. Korea posts worst growth figure for a decade in Q1

SEOUL, April 25, 2019 (BSS/AFP) – South Korea’s economy shrank 0.3 percent
in the first quarter, its worst performance for a decade, its central bank
said Thursday, as exports fell and companies cut investment amid the US-China
trade dispute.

It was the largest contraction for Asia’s fourth-biggest economy since a
3.3-percent drop in late 2008 at the height of the global financial crisis.

The trade-dependent country last posted negative growth — of minus 0.2
percent — in October-December 2017.

Falling exports and capital investment have put a dent in the economy
despite increased government and consumer spending, the central Bank of Korea
said in a statement.

Exports shrank 2.6 percent quarter-on-quarter, a sharp contrast from a
year earlier when they rose 4.4 percent, riding on solid demand for memory
chips — a key South Korean product.

Infrastructure investment dropped 10.8 percent over the same period, the
largest contraction since a 24.8-percent reduction in early 1998 when the
country received a $58-billion bailout package from the International
Monetary Fund.

President Moon Jae-in’s government on Wednesday approved a $5.8-billion
supplementary budget to boost exports and address air pollution.

But critics say Moon’s flagship economic policy of “income-led growth” —
featuring steep increases in the minimum wage — is hurting those it is
intended to help by raising employment costs.

The disappointing figures came after the central bank lowered its growth
outlook by 0.1 percentage points to 2.5 percent earlier this month, citing
sluggish global demand for memory chips and “intensifying trade disputes”
worldwide.

South Korea’s GDP grew 2.7 percent in 2018, the weakest pace in six years.

BSS/AFP/HR/0935