A one-percentage-point drop in China’s economic growth rate could deal a relatively heavy blow to South Korea’s economy than other countries as it depends heavily on the neighboring Asian country for trade, a private think tank said Sunday, Yonhap reported.
South Korea’s economy will see its growth rate shrink by 0.5 percentage point should China’s growth slow by one percentage point, according to a report by Hyundai Research Institute.
The projected drop is the third sharpest among major economies analyzed. Singapore could face the most negative impact from China’s slowdown, with its growth rate likely to shrink by 0.7 percentage point.
Indonesia came next with a 0.6 percentage point fall. Behind the relatively sharp drop in growth is South Korea’s heavy dependence on China for its trade.
China takes up about 25% of South Korean exports.
The report put South Korea’s China-exposure level to 12.8%, which is relatively higher than other Asian countries such as Malaysia, Vietnam and Thailand whose corresponding figures stood at 9.6%, 8.6% and 7.6%.
The report called on South Korea to lower its economic reliance on China as part of efforts to shield itself from possible fluctuations in the world’s second-largest economy.
South Korea and China held their first official round of bilateral talks last month on removing non-tariff barriers to trade as both countries continue to struggle with shrinking exports.
The first meeting of the countries’ Technical Barriers to Trade Committee was held in Beijing, marking the first ever meeting of 14 trade-related committees created under the South Korea-China free trade agreement that went into effect late last year, according to the ministry of trade, industry and energy.
