Struggling Exports in South Korea Hurt Economy

The South Korean President, Mr. Park Geun-Hye, warned that his country’s economy could be at risk of falling into serious long-term stagnation. As a result, he has urged that parliament act quickly when it comes to dealing with economic bills.

The economy is actually worse considering they are able to defray some of their self-defense costs to America as the U.S. spends billions of dollars every year protecting South Korea. Many people in the U.S. wonder how long that will continue.

The South Korean President, Mr. Park Geun-Hye, warned that his country’s economy could be at risk of falling into serious long-term stagnation. As a result, he has urged that parliament act quickly when it comes to dealing with economic bills.

The economy is actually worse considering they are able to defray some of their self-defense costs to America as the U.S. spends billions of dollars every year protecting South Korea. Many people in the U.S. wonder how long that will continue.

South Korea’s Sunny Days are Over

Over the recent months, low inflation, low growth, and a weak Japanese yen, alongside a quickly aging population, have all led to some serious economic risks in South Korea, according to Park. The president televised a parliament-based speech recently, noting that the country could be at a serious crossroad when it comes to stagnation and economic growth. The remarks given by the president are just one of the indications that a worsening customer confidence and weak global demand are demolishing South Korea’s economy.

South Korea makes off shore oilrigs. If the environmentalists did not own President Obama, there would certainly be more jobs for America and South Korea in the energy business.

The Finance Minister, Choi Kyung-Hwan, issued a similarly depressing assessment and forecast for his economy. However, despite the bleak outlook, the economy of South Korea expects to see growth of approximately 3.5% this year, an increase over the 3.0% growth of 2013. The numbers may look good, but it is essential to recognize that the country is in a series economic crisis. The outlook for South Korea currently remains uncertain, both on a global and local scale.

South Korea and Struggling Exports

One of the biggest hits to the South Korean economy this year came in September when growth failed to pick up as expected. While the economy continued to flounder, concerns regarding the performance of the country’s exports to China have deepened. Korea is an export powerhouse, but its recent shipments to China – one of the country’s largest markets – have been faltering because of increased competition from local markets.

These developments are having a harmful impact on the economy of Korea, which relies heavily on large exports of parts to China, as well as finished goods. Recently, the government announced that the country’s industrial production only saw an increase of 0.1% in September, far below economists’ expectations of 1%. This came as quite the surprise following a small recovery of exports in September after a decline in previous months.

Roughly 25% of South Korea’s total direct exports are destined for China, and roughly double that amount goes to the US, comprising approximately half of the GDP of the country. South Korea regularly runs double-digit rates of export growth.  This year, however, the central bank is expecting modest growth of only 3.5%.

Ignorant of Recent History

Alongside these issues, President Park’s government is attempting to boost local demand in order to reduce a reliance on overseas market. The government recently announced a stimulus package worth USD$40 billion to jump-start the property market and encourage spending. Park seems ignorant to business and economics. Stimulus packages offer only temporary relief and drive up the nation’s debt. He obviously did not read up on how Bush and Obama’s stimulus packages failed to revive the American economy.