South Korea’s Business Survey Index will be updated today for the month of July as the country struggles to kickstart
South Korea’s Business Survey Index will be updated today for the month of July as the country struggles to kickstart its economy.
The index is expected to fall in response to disappointing economic data. According to the Bank of Korea, the economy contracted by 3.3% in the second quarter of this year, sending the country into a recession. A modest 1.4% jump in private consumption was overshadowed by a 16.6% fall in exports; exports are closely tied to the overall health of the Korean economy as they represent 40% of GDP. A recovery in exports is largely out of Seoul’s hands—it is largely dependent on a recovery in foreign demand as countries reign in COVID-19 outbreaks and reopen their economies.
Domestically, the auto industry is continuing to receive generous support from the government in order to weather the pandemic. This support includes liquidity to auto manufacturers, quicker customs clearance and slashing the consumption tax on passenger cars by 30%. Automakers are a key pillar of the Korean economy and employ about 12% of the nation’s workforce. Expect this support to continue at least through the remainder of the year and in conjunction with other fiscal measures such as direct cash payments.
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