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South Korea
After outshining most of its regional peers in 2002, South Korea, Asia’s fourth largest economy, is slowing down, buffeted in 2003 by a variety of impacts, most notably the uncertainty surrounding North Korea's suspected nuclear programme, but also events such as the US$1.2bn accounting scandal at conglomerate SK Group. Consumer spending, benefiting from tax breaks on credit-card debt, has helped power economic growth in the past several years, but is now scaling down, with household debt up to 28.5% in 2002, and financial companies reining back on lending. High oil prices are also affecting South Korea’s economy, which is almost entirely dependent on imported energy; the petrochemical industry is especially hard hit. Increased costs associated with imported oil resulted in the country running a trade deficit in January and February 2003, the first back-to-back months of deficit since the 1997 financial crisis. While most basics remain strong, economists are predicting that South Korea's GDP growth will drop to about 4% in 2003, one-third lower than last year’s rate, while the continued post-Iraq uncertainty over the situation in North Korea may create still further falls in confidence.
Geoecon stats: DFAT Australia. 2002 figures unless
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