World Economy

South Korea’s Weak Exports, Spending Bode Ill for Recovery

September retail sales from a month earlier dipped 4.5%, the largest decline in almost six years
Foreign visitors in South Korea dropped 10.1% on-quarter to reach $4.12 billion, while South Koreans spent a total of $6.59 billion in the same period in overseas countries.Foreign visitors in South Korea dropped 10.1% on-quarter to reach $4.12 billion, while South Koreans spent a total of $6.59 billion in the same period in overseas countries.

The South Korean economy’s recovery momentum is weakening in the face of still sluggish exports and domestic demand, a state-run think tank said Sunday.

“Recently, the economy’s recovery pace is judged to have weakened as an upturn in domestic demand is losing steam amid the protracted slump in exports,” the Korea Development Institute said in its monthly evaluation of the country’s economic conditions, Yonhap reported.

“Retail sales and the service sector’s growth have decelerated, and related data indicate that the overall economy would slow down,” it said.

The KDI’s latest economic outlook is grimmer than the previous month when it assessed that the economic recovery is being maintained at a “mild” pace.

Retail sales gained 0.5% on-year in September, slowing from a 6.1% growth the previous month. From a month earlier, the September reading dipped 4.5%, the largest decline in almost six years.

The KDI predicted that a slump in retail sales would continue down the road with consumer sentiment expected to be further hurt by growing uncertainties.

Facility investment declined 4.2% on-year in September, as automakers reduced investment following the expiry of a special tax cut on auto purchases in June.

Service sector output grew 2.8% in September from a year earlier, decelerating from a 4.8% gain in August.

Outbound shipment also did not shows signs of a recovery. In October, exports declined 3.2% from a year earlier, also accelerating from a 5.9% decline the previous month.

The report said the current situation is unlikely to improve at any time soon, and herald a drawn-out slump in Asia’s fourth-largest economy.

 Overseas Spending

South Koreans’ overseas spending reached an all-time high in the third quarter of the year, driven by a large increase in the number of people traveling abroad, data from the central bank showed on Sunday.

South Koreans spent a total of $6.59 billion in the July-September period in foreign countries, up 21.7% from the previous quarter and 24% from a year earlier, according to the data compiled by the Bank of Korea.

The figure did not include spending for studying overseas.

The sharp rise was mainly due to an increase in travelers to other countries. During the third quarter of the year, a total of 6.05 million South Koreans went abroad, up 19.4% from the previous quarter, with their average spending per person reaching $1,089, according to the data from the Korea Tourism Organization.

In contrast, spending by foreign visitors in South Korea dropped 10.1% on-quarter to reach $4.12 billion in the third quarter.

From a year earlier, spending by non-residents in the country rose 28.7%, however, as foreigners delayed planned trips to Korea in the wake of the outbreak of the Middle East Respiratory Syndrome last year.

 Stocks Fall

The country’s stock market has been rocked by political uncertainties.

Benchmark index, the KOSPI, finished at 1,982.02 points on Friday, down 0.09% from the previous session’s close, flirting with the lowest level since July.

The main bourse’s market turnover also hit the lowest level of the year at three trillion won ($2.62 billion) on Friday, as investors took to the sidelines amid increased market uncertainties.

Last week, US stocks closed lower with Europe’s key stock markets also suffering a retreat out of concerns over Trump’s potential win.

 Emergency Meeting

South Korea’s financial regulator will hold an emergency meeting early this week to check the local market situation currently facing increased uncertainties such as the high-profile scandal involving a confidante of President Park Geun-hye that has roiled the country for weeks and the upcoming US presidential election, industry sources said Sunday.

Yim Jong-yong, the nominee to become South Korea’s new finance minister, and high-ranking officials from the Financial Services Commission and the Financial Supervisory Services as well as from related associations such as the Korea Exchange, will attend the meeting on Monday.


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