The growth in the second quarter was the lowest that Korea has seen since 2009 and that has been setting off some alarm bells at the highest levels of government. The reasons for the decline are hardly mysterious and that just adds to the gloom. As China has pulled back and slowed their economic expansion they are buying far less from Korea and most of the other export markets are also falling off. Japan is in the doldrums and the US has been reducing demand as well. Without the influx of export related money there is not much to drive the domestic sector either and Korea slumps.
This is the too familiar story for those nations that live and die with their export sector. When the rest of the world is booming along the nations like South Korea prosper but without that flow there is not enough internal demand to support the Korean industries. They need the US and European markets to come back and they really need China to reverse course.
Courtesy Dr. Chris Kuehl, Armada Corporate Intelligence and a contributing editor of BIIA