Seoul: The South Korean economy is at the risk of losing steam as deteriorating external economic conditions are feared to dent investment and export growth amid high inflation, the Finance Ninistry said on Friday.
Market volatility and global economic downside risks further expanded due to the Federal Reserve’s accelerating monetary tightening and global supply chain disruptions, Yonhap News Agency quoted the Ministry as saying in its monthly economic assessment report, called the Green Book.
“Amid a continued buildup in price pressure, there are concerns about the economic slowdown due to sluggish investment and the weak recovery of exports,” the report said.
The government presented a bleaker assessment than the previous month amid growing concerns about stagflation, a mix of slowing growth and high inflation.
Inflationary pressure has rapidly built up amid soaring oil and commodity prices, caused by the protracted war between Russia and Ukraine, and the recovery in demand.
South Korea’s consumer prices jumped 5.4 per cent on-year in May, the fastest rise in almost 14 years and a pickup from a 4.8 per cent spike in April.
Exports, the main driver of economic growth, rose 21.3 per cent on-year in May, extending their gains to the 19th month. But high fuel costs drove up the country’s import costs, resulting in a trade deficit for the second straight month.
The government report showed sales at department stores and card spending grew at a faster pace in May than the previous month amid relaxed virus curbs.
Card spending rose 16.4 per cent on-year last month, marking the 16th straight month of gains. The reading accelerated from a 13.8 per cent on-year increase in April.
Sales at department stores increased 20.8 per cent on-year in May, higher than a 15.6 per cent rise in April. But domestic sales of autos dropped 5.4 per cent, extending their falls into the third month.
The government lowered its 2022 economic growth outlook to 2.6 per cent from its December 2021 estimate of 3.1 per cent, while sharply raising this year’s inflation outlook to a 14-year high of 4.7 per cent from 2.2 per cent.
–IANS
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