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South Korea warns of deepening economic recession

Asia’s fourth-largest economy is widely expected to see growth dip below 2 percent next year.

South Korea warned of a deeper-than-expected economic slowdown next year, extending sales tax breaks on some fuel oil products and passenger cars for a few months.

“The growth of our economy is expected to slow down next year due to the effects of a global economic downturn, and the difficulty will center on the first half,” Finance Minister Choo Kyung-ho said in a statement on Monday. meeting with the leaders of the ruling party. adding that the economy was slowing down at a faster rate than expected.

The government is expected to announce its economic policy strategies for the coming year later this week, marking the first full-year statement for President Yoon Suk-yeol’s administration since its release in May.

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South Korea’s economy, Asia’s fourth-largest, relies heavily on exports, from cars and ships to chips and smartphones. Growth is widely expected to fall below 2 percent next year, from about 3 percent this year.

The central bank last month cut its forecast for next year’s economic growth to 1.7 percent from 2.1 percent earlier in its scheduled review, citing falling exports and the likely resulting reduction in investment. corporate.

With the economy now having to rely more on domestic consumption to make up for cooling export demand, the Ministry of Finance has extended tax breaks on fuel oil products and passenger car sales beyond six months. its original expiration at the end of 2022.

The ministry is due to reveal its economic projections and strategies for 2023 on Wednesday.

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President Yoon, struggling with low approval ratings, says exports are the best option for the industrialized country to weather its slide.

China, South Korea’s main export market, is facing problems of its own as its economy feels the pinch of years of strict controls to combat COVID-19.

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