Indicators point to continued slowdown

A total of seven out of 10 economic indicators were found to be manifesting slower growth as of October, with two of the indices on the decline, according to government figures.

The seven included the business survey index and consumer survey index ― critical measures of future expectations that companies and consumers harbor toward future economic and business conditions.

Indices measuring production and construction completed were shown to be sliding, with the only indicator on the rise being that for gauging retail sales, Statistics Korea said.

The business composite index also fell for the first time in half a year, the figures showed, indicating that the economy was unlikely to look up for the time being.

In particular, out of the 10 subcategories composing the leading economic indicators for October, nine were in the deficit, with the exception of the KOSPI index.

This marks the first time that nine of these subcategories fell into the red since October 2009 when a global financial crisis was approaching, the statistical office said.

However, experts said it was not the time to despair, pointing to several silver linings that might be signaling that the economy was finally bottoming out.

“September’s industrial production was better than in July and August, and exports also swung around from deficit in October,” said Kim Chang-bae, a researcher at Korea Economic Research Institute handling macroeconomic issues. “These can be indicators that the economy has finally hit the bottom.”

The snowballing household debt ― October’s figure grew by 4.7 trillion won ($4.3 billion) on-month, the largest clip in almost a year ― and sluggish real estate market conditions are the risk factors, but Kim said they would not take such a huge toll if the economy holds up.

The Organization for Economic Cooperation and Development forecast that Korea’s average annual economic growth would slow to 1 percent between 2031 and 2060, based on the current purchasing power parity.

A rapidly ageing population that would reduce the country’s workforce was cited as the biggest reason behind the less-than-sanguine prediction, the OECD said in a report.

Among the 42 OECD nations, Korea’s growth forecast for between 2031 and 2060 was in the lowest bracket, along with Germany and Poland.

Between 2011 and 2060, Korea was expected to grow by an annual average of 1.6 percent, the OECD added, to fall to 35th place in the organization.

The group also said once the current economic crisis was overcome, the global economy would register an annual average growth of 3 percent for the next 50 years, but said a huge disparity between nations and regions was expected.

The report also said by 2025, the combined GDP of China and India would surpass that of the G7 nations.

By Kim Ji-hyun (jemmie@heraldcorp.com)