Government Diagnoses 'Economic Slowdown Concerns' for Fifth Month... Warns of "Increased Global Economic Downside Risks" Amid Russia-Ukraine Escalation Possibility

Ministry of Economy and Finance, Economic Trends (Green Book) October Issue

On the 11th, amid high inflation and ongoing economic slowdown, a banner with the phrase "Price Stability" is hung at the Nonghyup Hanaro Club Yangjae branch in Seocho-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Sejong=Reporter Kim Hyewon] The government has diagnosed concerns over an economic slowdown for the fifth consecutive month. In particular, it judged that downside risks to the global economy have expanded due to the possibility of escalation in the Russia-Ukraine war.

On the 14th, the Ministry of Economy and Finance stated in the October issue of the 'Recent Economic Trends (Green Book)' that "amid sustained high inflation due to external factors and some impact on economic sentiment, concerns over an economic slowdown continue, including a weakening recovery in exports."

This marks the fifth consecutive month of expressing concerns about an economic slowdown, following the first mention in the Green Book in June during the economic recovery process after COVID-19.

Last month, consumer prices rose 5.6% year-on-year as petroleum product prices stabilized due to a decline in international oil prices. Consumer inflation peaked at 6.3% in July, then slowed for two consecutive months in August (5.7%) and September.

On the other hand, prices of vegetables including open-field vegetables such as cabbage and radish continued to rise, keeping the increase in agricultural, livestock, and fishery product prices at a high level of 6.2%. Personal service prices (6.4%) also maintained an upward trend.

Korea's exports last month increased by only 2.8% compared to a year earlier, marking a single-digit growth rate for the fourth consecutive month. This is the background for expressing the intention to improve the current account structure through the Green Book. The number of employed persons last month increased by 707,000 compared to the same period last year, but the growth rate slowed.

The government said, "We will make every effort to stabilize prices and people's livelihoods while thoroughly managing risks and boosting private sector economic vitality, and will also speed up efforts to improve the current account structure and structural reform tasks."

It also diagnosed, "Externally, amid ongoing global inflation, the acceleration of interest rate hikes by major countries, concerns over escalation of the Russia-Ukraine war, and China's lockdown measures have increased volatility in global financial markets and downside risks to the world economy."

The economic conditions of major export countries for Korea, such as the United States and China, remain unfavorable.

The U.S. economy continues to see an increase in employment, but industrial production has turned downward, and high inflation levels and housing market slowdown persist. The U.S. Consumer Price Index (CPI) for September rose 8.2% year-on-year, exceeding market expectations (8.1%), and the core CPI excluding volatile food and energy rose 6.6%, reflecting inflation concerns.

U.S. industrial production in August decreased by 0.2% month-on-month, mainly due to a 2.3% decline in utilities, and the September ISM manufacturing index fell to 50.9, below the market forecast of 52.

China saw a reduced export growth rate due to shrinking external demand and power shortages in Sichuan Province, while Japan experienced continued yen depreciation and expanding inflationary pressures, maintaining economic uncertainty. The Eurozone saw a temporary rebound in industrial production amid persistent high inflation, but producer and consumer sentiment continued to deteriorate.

This content was produced with the assistance of AI translation services.