An increasing number of experts are estimating South Korea’s 2023 real GDP growth at less than 2 percent, with its exports falling and domestic demand remaining sluggish.
Daishin Securities estimated it at 1.6 percent on Nov. 4. The latest estimates of Hana Financial Group and Fitch Ratings are 1.8 percent and 1.9 percent, respectively. Shinhan Investment estimated it at 1 percent last week.
The IMF estimated the growth at 2 percent last month and the OECD mentioned 2.2 percent in September. The Bank of Korea’s estimate is 2.1 percent and that of the Korea Development Institute is 2.3 percent. According to experts, they are likely to adjust their estimates downward soon.
This increasing pessimism is because, above all, South Korea’s exports are decreasing. Last month, the exports fell 5.7 percent year on year to US$52.48 billion, imports increased 9.9 percent year on year to US$59.18 billion, and the country was in the red for the seventh consecutive month.
The trade conditions are unlikely to get better soon amid global monetary tightening. Besides, the prices of energy resources are not falling, signaling successive trade deficits. Uncertainties related to the Chinese economy, which accounts for the biggest portion of exports from South Korea, are increasing with regard to COVID-19 lockdowns and President Xi Jinping’s third term.
On the domestic side, both consumption and investment, which showed moderate levels this year, are likely to shrink next year. This is because the interest burden of enterprises and households is increasing with disposable income falling due to high interest rates and consumer prices.