South Korean economy continues to struggle

AFTER performing badly for the first half of 2015, the South Korean economy continues to struggle amid weak external demand for its exports, persistent sluggishness in the Chinese economy, delays in global economic recoveries and adverse impact from the Middle East Respiratory Syndrome (Mers) outbreak.

South Korea's economy continues to be plagued by the persistent economic slowdown in China as these two nations share a close economic interlinkage whereby China is its biggest trading partner accounting for about 25 per cent of its exports. To add to its woes, the recent devaluation of the renminbi has reduced China's spending power, further hurting the demand for its exports. Indeed, its exports to China alone slid 8.8 per cent year-on-year in August.

Its overall exports have continued their trend of decline for the eight consecutive months as they fell 14.7 per cent year-on-year in August. This represents the steepest decline since August 2009 and far exceeded the declines of 3.3 per cent in July and 2.4 per cent in June.