South Korea records first economic contraction since early 2020
South Korean Economy
For the first time since 2020's second quarter, the economy of South Korea shrank in October-December as exports crashed while spending of consumers dipped due to inflation in interest rates, stated the central bank of the country on Thursday.
The Bank of Korea stated that in the last year's final quarter, the country's gross domestic product contracted by 0.4 per cent compared to the previous quarter.
The report of economic shrink comes after the borrowing costs were hiked for the tenth time by the Bank of Korea in a period of 18 months in early January, so as to tame inflation.
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The economic figures can force monetary policymakers to decrease their pace of hikes, as central banks across the world are trying to slow their tightening moves as the effects of steps adopted last years kicks in.
However, the Bank of Korea's major concern continues to be inflation which hit five per cent in December.
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"Private consumption fell 0.4 per cent due to a decrease in consumption of goods and services, (including) home appliances, clothing, accommodation, food and entertainment," stated the central bank, in a statement.
"Exports decreased by 5.8 per cent mainly in semiconductors and chemicals," the bank added.
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In the quarter, imports declined by 4.6 per cent because of a decrease in imports of crude oil and basic metals, the bank stated.
The economy still increased by 1.4 per cent on-year in the quarter and marked an increase of 2.6 per cent in the complete year of 2022.
As per the estimates of the central bank, the economy of the country will grow by 1.7 per cent in 2023 and inflation will increase by 3.6 per cent.
(With inputs from agencies)
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