China, Asia’s fourth largest economy, is widely expected to grow below 2% next year.
South Korea has warned of a worse-than-expected economic slowdown next year and has extended the consumption tax exemption for some fuel oil products and passenger cars for several months.
“The difficulties will be concentrated in the first half of the year as economic growth is expected to slow down next year due to the global economic downturn,” said Finance Minister Choo Kyung-ho during a meeting with the ruling party leadership. . Additionally, the economy was slowing at a faster pace than expected.
The government is due to announce its economic policy strategy for next year later this week. This will be the first full-year statement since President Yoon Seok-yeol’s administration took office in May.
Asia’s fourth-largest economy, South Korea relies heavily on exports ranging from cars and ships to chips and smartphones. Growth is widely expected to drop from nearly 3% for him this year and below 2% for him next year.
The central bank last month cut its economic growth forecast for next year to 1.7% from 2.1% last month, citing a potential drop in exports and a consequent drop in business investment.
As the economy needs to become more dependent on domestic consumption to offset the cooling in export demand, the Treasury will extend tax cuts on fuel oil products and passenger car sales by up to six months from the original deadline through the end of 2022. month extended.
The ministry is due to release its 2023 economic forecasts and strategies on Wednesday.
President Yoon, who is suffering from low approval ratings, says exports are the best way for a manufacturing country to overcome the recession.
South Korea’s largest export market, China, faces its own set of challenges as its economy feels the effects of years of tight controls to combat COVID-19.