South Korea's weakening export growth may hurt the country's growth by 0.2 percentage point this year as global demand remains sluggish and uncertainties involving a possible U.S. rate hike this month remain high, a parliamentary agency said Monday.
The country's weak export growth will continue to weigh on its gross domestic product (GDP) growth for two consecutive years. Last year, declining exports cut into the country's growth by 1.1 percentage points, according to the National Assembly Budget Office.
Korea's exports have fallen every single month since the start of 2015. In May, outbound shipments fell 6 % year-on-year to US$39.78 billion, according to trade ministry.
"The country's economy is heavily dependent on manufacturers such as shipbuilders and petrochemcial firms. As a result, an industry-wide slump has had a grave impact on exports," an analyst at the Korea Institute for International Economic Policy said. Given current market conditions, Korea's economy is widely expected to grow in the mid 2 % range this year. It grew 2.6 % last year.
Last month, the state-run Korea Development Institute cut its growth outlook for Asia's fourth-biggest economy to 2.6 % for this year from 3 % it forecast six months earlier.
The Bank of Korea and the International Monetary Fund recently predicted Korea to expand 2.8 % and 2.7 %, respectively, in 2016