Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Gov't admits economy slowing down amid falling exports, inflation
A port in the southern city of Busan. Poor export performance is partly to blame for the slowing economy, Jan. 11. Newsis
By Anna J. Park
Export, production, labor and domestic demand show sluggish performance
By Anna J. Park
The Korean government officially identified the country's economy as having slowed in its monthly economic analysis report on Friday. It is the first time that the finance ministry's monthly report acknowledged that the economy has slowed.
Back in June last year, the monthly report published by the Ministry of Economy and Finance first stated that there exists “concerns about economic slowdown” in the Korean economy. The ministry report used the same expression for seven months until December last year.
In January this year, the report warned that “the concerns about economic slowdown have been increased.” The February report finally admitted that the economic slowdown was due mainly to a high inflation rate, poor exports and diminishing corporate sentiment.
“While the inflation rate in the Korean economy has been maintaining a high level, the domestic economy has been slowing down, as seen in a slowed recovery rate in domestic demand, sluggish exports and shrinking corporate sentiment,” the monthly report stated.
Exports, which have been spearheading the Korean economy for a long time, have continued to show a sluggish performance. In January, the volume of monthly exports posted $46.27 billion, a fall of 16.6 percent, compared to the same month last year. It has been on a losing streak for four consecutive months since October last year.
While monthly exports fell by 16.6 percent year-on-year, January's monthly import stood at $58.96 billion, a decrease of 2.6 percent, year-on-year. As a result, the country's trade deficit in January logged an all-time high of $12.66 billion. It is a 10 month consecutive trade deficit.
Production in all industries has also gone down since December. It rose by 0.1 percent in November last year, compared to the previous month. But it again fell by 1.6 percent in December.
The labor market has also begun to freeze. The increase in employment has been slowing for eight months, since June. January's figure is the lowest increase in 22 months. In particular, the local manufacturing sector has seen a decline in the number of employees during January. The number of employees working in the manufacturing industry fell to 4.43 million in January, down from 4.46 million a year ago. The ministry expects the declining trend might continue, as long as exports remain flat into the future.
January's Consumer Price Index (CPI) rose by 5.2 percent, compared to a year ago, continuing a high level of inflation, which is being felt by consumers. As a result, local demand has been sluggish. The monthly earnings by local department stores in January fell by 3.7 percent, compared to a year ago, proving a falling trend in local demand.
“The ministry will do its utmost efforts to invigorate exports and investment while stabilizing inflation,” an official from the finance ministry said, adding that the ministry will also pay close attention to risk management.