According to a report by Yonhap News Agency on the 25th, the South Korean government is expected to lower its economic growth forecast for this year from the existing 1.6% by 0.1%-0.2% to reflect the weak performance of the country’s semiconductor industry. South Korea’s “World Journal” quoted a source from the South Korean government as saying that the Ministry of Planning and Finance will release the “economic policy direction for the second half of the year” next week, and is currently making final adjustments to this year’s economic growth forecast.
Prior to this, South Korean Deputy Prime Minister for Economy and Minister of Planning and Finance Choo Kyung-ho has revealed that the original economic growth forecast will be slightly lowered. A person from the Ministry of Strategy and Finance of South Korea said that although the forecast value has not yet been determined, judging from the recent economic trend, the downward adjustment will not be too large.
Last month, the Bank of Korea lowered its economic growth forecast for this year to 1.4 percent from 1.6 percent. The Korea Development Institute (KDI) cut its growth forecast to 1.5 percent from 1.8 percent. The Organization for Economic Co-operation and Development and the International Monetary Fund also forecast Korea’s economic growth at 1.5 percent.
South Korea’s semiconductor exports have continued to decline since August 2022. In May of this year, South Korea’s semiconductor exports were US$7.37 billion, a year-on-year decrease of 36.2%. Bank of Korea Governor Rhee Changyong said the chip industry will bottom out in the fourth quarter.
South Korea’s “Seoul Economics” stated that South Korea’s main export product, semiconductors, has a greater impact on the economy. Advanced strategic industries such as semiconductors and batteries, which have a huge impact on the economy, have reduced their contribution to economic growth due to “deteriorating external conditions.” According to a report released by Korea’s Hyundai Economic Research Institute on the 25th, a 10% increase in the sales of semiconductor and battery companies will contribute 0.248% to South Korea’s economic growth rate. Therefore, some voices believe that if South Korea wants to maintain its status as a manufacturing powerhouse, the government’s policy support is imminent.
“World Journal” said that the variable for the Korean economy in the second half of the year is still exported. In order to invigorate the economy in the second half of the year, the South Korean government plans to focus on export and investment. In addition to semiconductors and displays, it will also focus on infrastructure and food.
