Economy

Soaring prices in services sector feared to hamper economic recovery

A customer looks at the alcohol selection at a department store in Seoul in this file photo taken on April 29. YonhapBy Lee Min-hyungSoaring prices in the service sector are feared to thwart economic recovery, as they will weaken people's purchasing power despite increased outdoor activities following the lifting of social distancing measures here, experts said Monday. According to data from Statistics Korea, prices in the service sector rose by 4.5 percent in April from the previous year. This rise was the steepest increase in more than 13 years.Prices of personal services rose merely around 1 percent in 2020 in the early days of the COVID-19 pandemic. But they have started jumping at a rapid pace after hitting the 3-percent range in November. Economists explain that the rising service prices reflect not only the increase in costs but also the recovery of demand for services, as households have become accustomed to the ongoing pandemic.With the government easing most of the two-year-long social distancing restrictions in mid-April of this year, consumers are also widely expected to

May 9, 2022By Lee Min-hyung

Soaring prices in services sector feared to hamper economic recovery

Economy

Tax agency vows support for traditional liquor manufacturers

National Tax Service (NTS) Vice Commissioner Lim Kwang-hyun, fourth from left, poses with traditional liquor manufacturers and other tax agency officials at a meeting held in Seoul, Friday. Courtesy of the NTSBy Yoon Ja-youngThe National Tax Service (NTS) hosted a meeting with manufacturers of traditional liquors, Friday, during which the manufacturers demanded support from the tax agency. According to the NTS, diverse issues, including the taxation of traditional liquors, were discussed at the meeting. The traditional liquor manufacturers in particular showed their concern over the growing demand that mail order sales of liquor might be expanded. Currently, there is a restriction on mail order sales of liquors other than traditional liquors. They also demanded simplifying the liquor tax filing procedure and easing regulations on the degree of alcohol content. “Korea is seeing a 1.2 trillion-won deficit annually in the liquor trade, and the deficit is expanding. Traditional liquors need to be promoted to substitute for wines, whiskeys and sakes. The tax agency will also provide

May 9, 2022

Tax agency vows support for traditional liquor manufacturers

Economy

Korean economy facing growing downside risks: KDI

gettyimagesbankDespite a moderate recovery, the Korean economy faces increasing downside risks as worsening external conditions hamstring investments and exports, a state think tank said Monday.Asia's fourth-largest economy has been gathering recovery momentum on robust growth in the services sector, but business sentiment has been hit by policy uncertainties in major economies and continued global supply chain disruptions, the Korea Development Institute (KDI) said in its monthly economic report."The economy remains on a recovery path following the easing of COVID-19 social distancing measures, but downside risks are expanding as growth of exports and investments slows due to deteriorating external conditions," the report said.In mid-April, Korea lifted most of its social distancing restrictions, including gathering limits and business hour curfews, as part of the country's efforts to return to pre-pandemic normalcy.The report said worsening global supply chain bottlenecks and high international materials costs have put a dent in Korea's construction and corporate facility investmen

May 9, 2022

Economy

Companies urge Yoon gov't to bolster Korea's growth potential: survey

President-elect Yoon Suk-yeol delivers a congratulatory speech commemorating Buddha's birthday at a Buddhist temple in central Seoul. YonhapBy Anna J. ParkBusinesses are calling for the incoming Yoon administration to prioritize regaining corporate growth momentum amid the hostile economic market conditions, including rising interest rates, the soaring exchange rate and global supply chain disruptions, a survey showed, Sunday.According to a recent survey of 322 corporations by the Korea Chamber of Commerce & Industry (KCCI), the surveyed companies' two most frequent demands for the new government are the recovery of the economy's growth engine and the stabilization of inflation.Regarding the factor that most negatively influenced their businesses, 77.3 percent of the surveyed companies said it was the rising inflation rate, as inflation hurts corporate profitability and reduces the demand for products or services. Also, 51.6 percent of the responded companies said they directly experienced losses from the soaring won-dollar exchange rate, as the weakening won increased the costs

May 8, 2022By Anna J. Park

Companies urge Yoon gov't to bolster Korea's growth potential: survey

Economy

Concerns grow over global double-dip recession

gettyimagesbankExperts warn trade-dependent Korean economy faces bigger crisisBy Anna J. ParkThe global economy is facing the risk of a double-dip recession as the U.S. Federal Reserve plans to begin its quantitative tightening from June this year, wiping off the market's liquidity to curb inflation, according to financial market watchers Sunday.The double-dip recession refers to the economy's second descent into a recession followed by a short-lived recovery and is also known as a “W-shaped recession.”They warn that the possibility of a global double-dip recession is looming closer than ever. If the double-dip recession is realized this time, it will be the first major one since the early 1980s. That's when the global economy suffered from the second round of a 16-month downturn amid soaring inflation and rising interest rates in late 1981 and in 1982, following a six-month recession in early 1980 and a short-lived recovery late that year. While market watchers hope for the world economy's soft landing amid the unfavorable market conditions, they agree it won't be easy f

May 8, 2022By Anna J. Park

Concerns grow over global double-dip recession

Economy

Will South Korea boost ties with Europe amid China-US rivalry?

EU alliances with Japan and South Korea have been highlighted amid the protracted war in Ukraine, as they are among the few Asian nations to have slapped sanctions on Russia. gettyimagesbankEU seeks to bolster relations with economies in Indo-PacificBy Kim Bo-eunHONG KONG ― The European Union (EU) appears to be increasingly reaching out to economies in Asia, as the world's largest trading bloc reassesses its economic ties with China and seeks greater engagement with the Indo-Pacific region.The EU Council, composed of government ministers from each EU country, endorsed its Indo-Pacific strategy in October and has been accelerating moves to bolster ties with economies there.In a time of escalating tensions between Washington and Beijing, Brussels is weighing the risks of relying so heavily on China in its supply chains.EU alliances with Japan and South Korea have also been highlighted amid the protracted war in Ukraine, as they are among the few Asian nations to have slapped sanctions on Russia.Late last month, German Chancellor Olaf Scholz visited Japan, rather than top trading partne

May 8, 2022By Kim Bo-eun

Will South Korea boost ties with Europe amid China-US rivalry?

Economy

New gov't expected to propose extra budget estimated at 34-36 tril. won

Closed shops with for lease signs are seen in the shopping district of Myeongdong in Seoul amid the COVID-19 pandemic, in this Feb. 24 file photo. YonhapThe incoming government of President-elect Yoon Suk-yeol is expected to announce an extra budget proposal estimated at some 34 trillion to 36 trillion won ($26.8-28 billion) later this week in its efforts to support merchants hit hard by the pandemic, officials said Sunday.The finance ministry plans to unveil details about this year's second extra budget this week after Yoon takes office Tuesday, according to government officials.The now-dissolved transition team earlier said the new government aims to spend 33.1 trillion won or more to fully compensate micro business owners for their losses.During the election campaign, Yoon promised to spend around 50 trillion won for the compensation program. The team calculated the amount of planned support after subtracting the 16.9 trillion-won extra budget created in February from Yoon's proposal.The transition team estimated the self-employed saw their operating profits fall a combined 54 tri

May 8, 2022

New gov't expected to propose extra budget estimated at 34-36 tril. won

Economy

KOSPI ends down on overnight declines on Wall Street

By Lee Min-hyungKorean stocks pulled back Friday as overnight declines on Wall Street sapped investor sentiment here.This situation heightened fears that the benchmark KOSPI might extend its losses at a time when the U.S. Federal Reserve is scheduled to carry out additional big rate hikes by the end of this year.The main bourse closed at 2,644.51, down 1.23 percent from the previous session, after foreign and institutional investors went on a selling spree. The secondary KOSDAQ also widened its losing streak and closed down 1.76 percent during the same period.The major stock indices in New York went on a relief rally on Wednesday soon after the Fed's 50-basis-point rate hike. But investors took flight the following day, as inflationary concerns remain in place despite the aggressive monetary policy.Market experts said that stock markets would continue to face volatility, as the much-anticipated rate hikes by the Fed cannot be a cure-all for the ongoing inflationary concerns.“The Fed's latest monetary decision is favorable to the market from a short-term viewpoint, as it cleared

May 6, 2022By Lee Min-hyung

KOSPI ends down on overnight declines on Wall Street

Economy

BOK likely to deliver back-to-back rate hike in May: brokerage

Bank of Korea Gov. Rhee Chang-yong / Korea Times fileKorea's central bank is likely to deliver a back-to-back key interest rate rise in May as part of its efforts to rein in inflation, a major local brokerage house said Friday.The Bank of Korea (BOK) raised its policy rate by a quarter percentage point to 1.5 percent during the April meeting, the fourth increase since August last year.The BOK is slated to hold its next rate-setting meeting May 26, the first such meeting to be chaired by new BOK Gov. Rhee Chang-yong, who took office last month."Accelerating consumer prices and inflation expectations (in Korea) have resulted in a greater need for the BOK's monetary policy board to rush an additional interest rate increase," Kim Ji-man, an analyst at Samsung Securities, said.The BOK's minutes of its April policy meeting, which were disclosed Tuesday, showed that members had called for further rate increases to tame inflation, he said.This year, the BOK is expected to jack up its benchmark rate three times in May, July and October, raising the key rate to 2.25 percent by the end of the y

May 6, 2022

BOK likely to deliver back-to-back rate hike in May: brokerage

Economy

Korea vows 'preemptive' steps against market volatility after Fed's rate hike

First Vice Finance Minister Lee Eog-weon / Yonhap The finance ministry vowed Friday to seek preemptive measures, if needed, to tackle market volatility "in an aggressive and swift manner" following the U.S. central bank's half-point rate hike.On Wednesday (local time), the Federal Reserve raised its benchmark interest rates by a half-percentage point to curb the country's worst inflation in about four decades. The increase was the sharpest in 22 years.Fed Chairman Jerome Powell said 50-basis point rate hikes "should be on the table at the next couple of meetings," though the committee is not actively considering even more aggressive rate hikes."As external uncertainties surrounding the Korean economy have continued, concerns have increased over high volatility in Korea's financial markets," First Vice Finance Minister Lee Eog-weon said, stressing the need for "preemptive responses.""The government will closely monitor the market situation and risk factors with extra

May 6, 2022

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Read more

Soaring prices in services sector feared to hamper economic recovery

Tax agency vows support for traditional liquor manufacturers

Korean economy facing growing downside risks: KDI

Companies urge Yoon gov't to bolster Korea's growth potential: survey

Concerns grow over global double-dip recession

Will South Korea boost ties with Europe amid China-US rivalry?

New gov't expected to propose extra budget estimated at 34-36 tril. won

KOSPI ends down on overnight declines on Wall Street

BOK likely to deliver back-to-back rate hike in May: brokerage

Korea vows 'preemptive' steps against market volatility after Fed's rate hike

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