South Korea’s government promised stronger support for exporters as the country posted its first economic contraction in 2/1-2 years on Thursday, mainly due to a drop in exports, and faced the prospect of a recession.
Downplaying the economic slowdown as part of a global trend and calling a return to growth in the current quarter “possible”, Finance Minister Choo Kyung-ho promised quick support measures such as tax breaks and administrative help for exporters.
The central bank estimates that the gross domestic product (GDP) contracted by 0.4% in the October-December period compared to the previous quarter. Economists in a Reuters poll had expected a 0.3% decline.
“The government will focus policy resources on reactivating exports and investment, such as stepping up regulation efforts and offering tax and financial support,” Chu said at a meeting of officials open to reporters.
The first GDP decline since the second quarter of 2020 was a 5.8% contraction in exports and 0.4% in private consumption, according to central bank estimates, while government spending posted a sharp 3.2% increase, which was seasonally adjusted. was adjusted.
There are signs of continuous weakness in the first quarter. The slump in the property market has deepened and exports per working day were down 8.8% in January 1-20 compared to a year ago.
Economists usually define a recession as two or more consecutive quarters of contraction. If the decline in first quarter GDP is eventually reported, the South Korean recession would be considered to have started about four months ago. The economy was last in recession in the first half of 2020.