The South Korean economy rebounded from July to September, expanding 2.6 percent after struggling with a deadly outbreak and a sluggish economy, according to AP. The growth was steered by recoveries in consumer spending and construction, but the economy suffered a decline in exports due to a lack of demand from China. The Q3 growth rate marks the fastest performance in South Korea in over five years.
When the MERS outbreak plagued South Korea during the summer, further economic devastation took the form of a lack of tourists flowing into the country. MERS, a viral disease that affects the respiratory system, has killed over 30 people in South Korea, with the latest death occurring on October 25. The nation paid a heavy price from the outbreak, and more work needs to be done to boost the economy.
High household debt burdens South Korea, casting uncertainties over the longevity of the recent spending boost. The government has vowed to take action over the debt situation, but very little has been accomplished, and critics had made note of such shortfalls. Officials added another holiday and lowered taxes to spur growth, but the jury is out on whether such moves will be successful.
South Korea has a two-week Black Friday, known as Korea Black Friday, which started on October 1, and partially explains the pickup in consumer confidence. This translated into a surplus in the retail sector not seen since before the MERS incident, but with high youth unemployment and a low-wage gap, current circumstances do not allow more people to participate in the spending boom.
For example, a sole breadwinner who has two children must work over 60 hours a week to make ends meet, notes Asia One. South Korea also has an unusually high corruption rate when compared to other post-industrial economies, with the inclusion of a high poverty rate of over 14 percent. South Korea also faces problems in the world market.
The Korean won strengthened recently, but many company owners are concerned about competition from abroad, including the instability of the world market. A weaker Japanese yen allowed firms in that country to gain a competitive edge in the region, and low oil prices hurt South Korea's energy export sector, a major source of revenue for the economy.
While exporters made gains in certain areas, analysts expect the export sector to hinder growth over the remainder of the year.