Kimchi losing its spice
THE Korean economy had a poor start to the year as a result of weak external demand for its exports and a slow recovery in domestic demand activities. Contributing factors include a slowdown in the Chinese economy, delays in global economic recoveries, low oil prices and a weak Japanese yen.
Being an export-driven economy, Korea is affected by a weaker China, which is its biggest trading partner accounting for about 25 per cent of its exports. Korea's exports have contracted 8.1 per cent year on year in April and have declined for four straight months this year.
Making matters worse, the depreciation of the Japanese yen has reduced the competitiveness of Korean products that compete directly with Japanese products. This price competition with Japan has badly hit Korean exporters, from carmakers to machinery manufacturers, resulting in smaller overseas shipments to global markets.
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