It is believed that the financial crises stemmed up starting July 2007 when the investors lost their confidence in the secured mortgages in the US leading to credit crisis. In this scenario, the Federal Reserve helps to bail out the dying financial market. There have hence been various declinations in the international trade, employment leading to poor global economy. Few of the countries are discussed below:?
South Korea, Asia's third- largest economy
In 2008, South Korea's economy expanded by 2.5 %: slowest gain in a decade and half the rate of 2007.
- Decline in production, domestic demand and exports and stagnant job market indicated that the economy was worsening.
- January 2008: exports dropped 32.8% from a year earlier.
- December 2008: Consumer goods sales declined 7 % from a year earlier.
- 12,000 jobs were shed, the first job loss in more than five years.
- Reflecting deteriorating exports and domestic consumption, the Bank of Korea cut its full-year 2008 economic growth forecast to 2.5% from a previously estimated 3.7%.
- As consumer demand collapsed around the world, two of South Korea's top manufacturers -- Hyundai Motor and LG Electronics – announced tough economical future.
- The ratings agency expects South Korea's economy to contract by 2.4% in 2009.
- In the fourth quarter, Korea's goods exports fell a seasonally adjusted 11.9% from the previous three-month period (it was the biggest decline since the 1979 first quarter).
- Capital investment fell 16.1% on-quarter, reversing from a 2.1% rise in the third quarter. The index declined 14.0% year-on-year, versus a 4.7% increase in the preceding quarter.
- Private consumption shrank 4.8% on-quarter, reversing a 0.1% rise in the third quarter. Year-on-year, spending fell 4.4%, down from a 1.1% gain recorded in the previous quarter.
(Since GDP rose 5% in 2007, economists surveyed by Dow Jones Newswires had projected the South Korean economy would grow 3.3% for all of 2008; they also estimated that growth would more than halve in 2009)
http://online.wsj.com/article/SB123259708116105359.htm
The consequences were:
http://online.wsj.com/article/SB123259708116105359.html
In May 09, reports showed South Korea’s exports slumped at the fastest pace in four months in May as demand from the U.S., Japan and China weakened. However, Factory production gained for a fourth month in April, manufacturers’ confidence climbed to an eight- month high and consumer confidence rose to the highest in almost two years.
The $929 billion economy avoided a technical recession in the first three months of this year, helped by record-low interest rates and government stimulus. South Korea’s economy grew 0.1 percent in the first quarter, rebounding from a 5.1 percent contraction in the previous three months.
The government said it will maintain an “expansionary macroeconomic policy” including the extra spending. South Korea probably posted a current account surplus of more than $4 billion in May.
http://www.bloomberg.com/apps/news
Similarly,
http://news.bbc.co.uk/2/hi/business/8166648.stm
Hence on August 9, the IMF upgraded its 2009 economic forecast for South Korea for the second time in a month. "Accordingly, Directors agreed that macroeconomic policies should continue to focus on supporting growth until a self-sustained recovery is firmly established."
http://www.cnbc.com/id/32350802
