KDI Economic Outlook Darkens Further: "Increase in Indicators of Economic Slowdown"

"Weakening Economic Recovery" to "Possibility of Economic Slowdown" Mentioned
"Export Slump Due to Worsening External Conditions... Indicators Suggesting Economic Slowdown Gradually Increasing"

On the 3rd, as the U.S. Federal Reserve (Fed) took a more hawkish stance than the market expected, the domestic stock market also started lower. This is a view of the Hana Bank dealing room in Jung-gu, Seoul. On that day, the KOSPI opened at 2297.45, down 39.42 points (1.69%) from the previous trading day, and the won-dollar exchange rate opened at 1425.3 won, up 7.9 won. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Sejong=Reporter Kwon Haeyoung] The Korea Development Institute (KDI), a government-funded research institute, has mentioned the possibility of an 'economic slowdown' in South Korea. While it had expressed concerns about a weakening economic recovery over the past two months, it has now issued a darker diagnosis.

On the 7th, KDI released the 'November Economic Trends' report, analyzing that "amid deteriorating external conditions and sluggish exports, indicators suggesting a potential economic slowdown are gradually increasing."

In the economic trends report released in September, KDI mentioned the phrase 'weakening economic recovery' for the first time in three months and issued a similar diagnosis in October. This month, it has gone beyond the weakening recovery to indicate the possibility of an economic slowdown.

As signs of an economic slowdown, KDI pointed to the global economic growth deceleration. The manufacturing sentiment indices of major countries and the OECD leading indicators continue to decline. KDI explained, "Exports, centered on semiconductors, have shifted to a decline, and manufacturing is weakening, leading to a slowdown in growth. Meanwhile, with the sharp interest rate hikes in the United States continuing, domestic financial market uncertainties are also expanding, including temporary credit instability in the short-term money market."

Regarding the service sector, KDI assessed that it is continuing a favorable recovery mainly in face-to-face industries as it moves away from the impact of COVID-19. KDI analyzed, "Production and employment are maintaining high growth rates in accommodation and food services, arts, sports, and leisure-related services."

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