53957
South Korea Economy Ailing
South Korea Economy Ailing

South Korea Economy Ailing

South Korea Economy Ailing

A political scandal has sparked massive anti-government protests in South Korea. President Park Geun-hye is facing questions about the financial dealings of an unelected confidante: Choi Soon-sil is accused of using her ties with the president to coerce local firms to donate millions of dollars to non-profit foundations that Choi then used for personal gain. The president has defied calls to step down, but the political scandal is happening at the wrong time for the country’s economy.
South Korean growth slowed to 2.7% in the third quarter of 2016, down from 3.3% in the previous three months. Some of the biggest conglomerates are also in trouble: Samsung’s smartphone recall, a strike at Hyundai Motor, and a major bankruptcy at Hanjin Shipping have hurt production, Aljazeera reported.
Samsung is the biggest South Korean “chaebol”, the country’s giant, family-owned conglomerates that essentially control industry. Samsung alone is responsible for 20% of South Korea’s gross domestic product. Its closest rival is the Hyundai Motor group, but both companies are facing challenges and both are crucial to the country’s growth outlook.
Escalating fears over the leadership vacuum, economic indexes are showing the country’s economy is ailing. Also, a big shift in the global economy is coming after Donald Trump’s upset win in the US presidential election, heralding an end to low interest rates.
In the global financial market, rates are rising over expectations over the Trump administration’s economic boost, forcing South Korea to also come up with policies to embrace change because a widened gap between the US key rate and that of Korea may trigger a massive capital flight out of the country.
The Bank of Korea, however, is cautious in changing its rate because it will affect the household mortgage rate and the nation’s household debt, which is hovering around 1,300 trillion won ($1.1 trillion).
Also, there are calls for the central bank to cut its rate to boost the economy.
Against this backdrop, however, the government finds itself drifting in establishing next year’s economic policy direction, which is set to be announced next month. Setting up the year’s economic policy direction is led by the ministry and orchestrated by other government financial arms.
“In order to set up policies, there has to be a big picture in political direction,” said a government official asking not to be named. “However, there is a huge vacuum in leadership which should set the direction.”

Short URL : https://goo.gl/SRi6yZ
  1. https://goo.gl/rlATO8
  • https://goo.gl/v7MHrN
  • https://goo.gl/fXA60R
  • https://goo.gl/RIO8zh
  • https://goo.gl/Mmji1l

You can also read ...

The expected increase in the squeeze on living standards comes as the weak pound pushes up the cost of imported  fuel, food and raw materials.
All eyes will turn Tuesday to Britain’s consumer price index...
Russia FDI Almost Doubles
The volume of foreign direct investment has almost doubled in...
Bulgaria Risks Higher Inflation
Real wage growth in Bulgaria has been exceeding productivity...
The German share price index, DAX board, is seen at the stock exchange in Frankfurt.
Shares rose in Europe and Asia on Monday after leaders of...
Increase in China Factory Price Inflation
China’s factory price inflation rose again in September,...
Venezuela Needs $30b a Year to Rescue Economy
The International Monetary Fund calculates a potential rescue...
Yellen says economic growth slowed slightly in the  July-September quarter.
Federal Reserve Chair Janet Yellen sketched a bright outlook...
Japan Factory Output Up
Japan’s industrial production increased less than initially...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus