Experts warn of a dark year ahead as South Korea’s economy slows
Concerns of an economic downturn in South Korea sent stocks to a 17-month low as a key index in Seoul continued to slide. The decline came after the International Monetary Fund lowered the nation’s growth forecast. Experts tell VOA that unless the government changes course, current economic policies will likely lead to further losses.
Stocks in South Korea fell Wednesday, reeling from fears of an economic downturn that crept through the markets. Seoul’s benchmark Korea Composite Stock Price Index (KOSPI) shed more than 1 percent of its value (closing down 25.22 points). It was the seventh straight day to do so.
Some analysts said the steep decline Wednesday was the result of the International Monetary Fund’s lowering South Korea’s 2018 growth outlook to 2.6 percent.
The IMF extended the downward trending outlook through 2023, keeping South Korea at a steady 2.6 percent growth, rather than the 2.9 percent it originally predicted next year and beyond.
Intertwined economies
The IMF report shone a bleak light on the international market as well, cutting predictions by two-tenths-of-1-percent to 3.7 percent, citing the trade war between the United States and China as the main factor.
Dankook University professor of economics Kim Tae-gi said Korea’s downward revision is because the two main trading partners that South Korea has are the U. S. and China.
“[The trade war] will impact the export of goods to China as well as to the United States,” he said.
He says trade wars and depreciated currency rates will negatively impact the Korean economy.
