The up and coming economies of Asia are taking one hit after another as the global financial turmoil drags on. Today, it’s South Korea. The BBC has the story:
The Ministry of Strategy and Finance says Asia’s fourth-largest economy is likely to grow by 3.8% in 2011 and 3.7% in 2012.Previously, it had forecast expansion of 4.5% for both years.Meanwhile, South Korea’s exports are set to slow to just 7.4% in 2012 from almost 20% in 2011, the ministry said.Exports account for about half of South Korea’s economy.
South Korea is not alone: even China cut its growth forecasts recently. Export oriented also means export dependent: that is one of the big flaws in Asia’s development model. It is hard to insulate yourself from turmoil elsewhere when the state of your economy depends on the mood and the means of consumers around the world.And a thought for those who assume China will be able to transition away from the export model easily: if smaller, richer South Korea has had such a hard time weaning itself away from export dependency, how long will it take China to shift to a new growth model?