Small businesses in Korea have been hit hard by the Moon administration increasing the minimum wage. Photo: iStock

South Korea’s economy grew by just 0.6% in the three months to September 30, equalling the lowest quarterly expansion since 2009, as employment and domestic investment both remained weak.

The Bank of Korea is expecting 2.7% growth for the entire year, which is well below earlier estimates of 2.9% for the year. If realized, this will be the slowest growth since 2012, when the economy expanded by 2.3%, and contrasts with a 3.1% expansion in 2017.

Third-quarter growth was unchanged from the previous three months, according to central bank data that was reported by Yonhap news agency, but it was 2% up on the same period in 2017. In the first quarter the economy grew by 1% on the December 2017 quarter.

In 2019 growth is expected to remain at 2.7%, or 0.1 percentage point below the bank’s initial outlook, as worsening trade tensions between China and the US buffer export shipments and contain employment.

Only 17,000 new jobs were created in the third quarter, down from 101,000 in the previous three months, while corporate investment dropped 5.7% from the same period in 2017. Investment is expected to decline by 0.3% in the whole of 2018 as business confidence falters.

“Employment may turn around in the latter half of this year on the back of the government’s job creation packages,” the bank said. “But a protracted slump and on-going restructuring in some key industries will likely continue to weigh heavily on the employment market.”

On the upside, exports remain fairly strong despite the stronger won and cross-Pacific trade rows. Shipment growth of 3.5% is forecast this year and 3.2% in 2019, compared with a 3.8% expansion in 2017.

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