Seoul, Jan. 26 (BNA): Central bank data on Thursday showed that South Korea’s economy grew at a slower pace in 2022 due to weaker exports and corporate investment amid mounting recessionary problems.
South Korea’s gross domestic product is estimated to have grown by 2.6 percent in 2022, compared to a 4.1 percent increase in the previous year, according to Bank of Korea (BOK) data, Yonhap reports.
It still beats the Bank of Korea’s annual growth forecast.
In the fourth quarter of last year, the economy contracted by 0.4 percent from three months earlier, compared to the previous quarter’s growth of 0.3 percent.
Growth in 2022 was the slowest pace since 2020, when the economy contracted by 0.7 percent amid the fallout from the coronavirus pandemic.
The slowdown in growth was attributed to weak export growth amid falling sales of semiconductors and other commodities. The data showed that overseas shipments grew by 2.9 percent in 2022, compared to an increase of 10.8 percent in 2021.
The South Korean economy is facing increasing concerns about the recession, which may harm the demand for South Korean goods that are burdened by tightening global monetary policy with the aim of curbing high inflation.
The outlook for the economy remains bleak as exports are expected to remain sluggish and consumption and corporate investment feared a downturn amid higher borrowing costs driven by the Bank of Korea’s interest rate hike.
Severe coronavirus-related restrictions in China, in particular, hit South Korea’s exports hard last year as their access to the world’s largest market was impeded.
Private consumption expanded 4.4 percent last year, up from a 3.7 percent rise in 2021, apparently thanks to an easing of coronavirus restrictions.
However, investment in utilities shrank by 0.7 percent last year compared to the 9 percent advance recorded in the previous year. Construction investment contracted 3.5 percent, worse than the 1.6 percent decline in the previous year.
Government spending increased by 4.2 percent last year, less than the 5.6 percent advance in the previous year.
Concerns are growing that economic growth may slow further in the future as exports are likely to remain sluggish amid growing concerns about a recession.
In November, the Bank of Korea predicted the economy would grow 1.7 percent this year, but Bank of Korea Governor Ri Chang-yong recently expressed concerns that growth could be slower than expected, citing the possibility of a global recession and the impact of sharp interest rate increases. on the overall economy.
Hang Sang-pil, head of the Bureau of Economic Statistics at the Bank of Korea, told reporters Thursday that private consumption appears to be growing, but it is still difficult to predict the path of economic growth.
“Although exports have slowed, private consumption appears to be picking up compared to the previous quarter as credit card usage expanded,” he said. “However, it is difficult to predict whether the growth rate in the first quarter will be positive or negative at this point.”
FKN