It’s ugly and getting uglier. Heck, things stateside aren’t too pretty either especially when you have 60,000 layoffs anounced in one freakin’ day!
It’s bad news and badder news:
- Although technically not a recession, Korea’s economy dropped 5.6% in the fourth quarter 2008.
- However, Morgan Stanley estimates that Korea’s economy will drop 2.8% in 2009. Two consecutive negative quarters is the academic definition of a recession and it’s highly unlikely that the first quarter 2009 will have positive GDP growth.
- Korea isn’t the only Asian country catching the economic contagion. Japan and China are wheezing as well.
- The bottom isn’t here yet, because the economic slowdown hasn’t hit full stride in China, who is Korea’s largest export market. The economy is so bad in China that people are actually moving back into the farms from the factories. It’s reverse development folks!
Well, any good news?
- The weaker won has made Korean exports more attractive compared to Japanese and Taiwanese competition.
- Hyundai/Kia’s sales are actually up over 6% (although overall profits are down).
- Samsung has faced its first quarterly operating loss ever, but it has enough cash reserves to weather the storm.
Okay, the actual good news at this point is extremely slim pickings and I expect the economic data in the first quarter 2009 to all but confirm that Korea’s recession started in Q4 of 2008. The biggest issue will be the severity of the recession, not if Korea will fall into one. That, in my mind, is a foregone conclusion.
Update: Excellent article in the ever dependable Economist regarding the economic difficulties in East Asia. Korea is a little different from the rest of the economies of the region in that it’s a drop in consumer spending, not a drop in exports, that have fueled the GDP decline. Korean exports have actually caused a net increase in GDP, which indicates that exports are actually a bright spot for the economy, something I alluded to earlier above.
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Minor math flame: “Korea’s economy will drop a negative 2.8%” If it drops by -2.8%, doesn’t that mean it is climbing by +2.8%? Woo-hoo Good news!
uhg… yeah I guess so.
Fixed.
All these bad news should make a lot of foreigners very happy.
Why should it?
Every other developed country is just as fucked.
Well, maybe exception Canada, who is doing better comparatively. But one can hardly call Canuckistan “developed” with all those eskimos and polar bears up north…
…moving back into the farms from the factories.
On a farm you can grow food. You can’t eat factory made manufactured goods.
Also, I recently noted in the NY Times that China is pouring over $500 billion, much of which is going into building infrastructure in the rural hinterlands. If so, then the workers are not really going back to the farms but looking for work pouring concrete and building roads and rail in China’s bid to make the backwaters catch up in development to the wealthier coastal regions.
bader news? I prefer Vader news
It actually should be “badder”, but what do I know. I didn’t speak English until 1997.
I wonder what effect the recession in Korea will have on the Engrish-mania industry?
I cannot see how households will be able to justify spending top won for expensive hagwon tuitions in such a dismal economic environment, no matter how freakin precious they think their children’s education is.
Well technically “badder” isn’t a word, right? So I misspelled a non-existent word!
worse.
badder??? Please, maybe, worse, or more worse, but badder from an english teacher, hmmm fire him send him back to the badder farms.
Could be a massive blow for the hagwon industry, not just the English one either. Would mean massive joblosses I imagine.
The hagwon industry should die a death from 1,000 little cuts, considering the undue influence they have in turning education into a business.
# 12,
Yeah, but what would thousands of aimless liberal arts degree grads from English speaking countries do without it???
Well, there’s always a job at Starbucks!
Did you the read the Chosun Ilbo article yesterday, and the New York Times article couple of weeks ago?
The number of Korean students to US and Canada are way off. They’re all going back home.
“The number of Korean students to US and Canada are way off. They’re all going back home.”
I seem to recall seeing a similar situation around 11 years ago. They’ll be back…
When people are unemployed they tend to re-educate. The hogwan industry may well be in for a boom.
Excellent observation madar. For-profit secondary education is gonna be a hot market!
#17,18 – From what I’ve been told by those in institute management – English or other skills – that’s exactly what’s happening. Student numbers are apparently looking good.
Also, I wouldn’t be surprised to see even more university students putting off graduation – or going for an MA – instead of testing the job market waters.
Context, context, context. What’s the net effect given the huge diminution in demand, and the even bigger drop in financing for demand, for product?
Pretty grim, it seems, given Korea’s drmatically falling export performance.
Korea’s really looking at extended time in the hurt locker. The economy here is completely dependent on exports (i.e., on importing wealth from other countries, while blocking those countries from getting any money out of Korea), and all of Korea’s markets are seeing cratering demand at the same time. US, EU, China — all in the dumper.
Yes, Korea’s been pretty innovative at seeking positions in emerging markets in Africa and South America, but them markets ain’t emerged yet.
Living standards here are going to take a kick in the pants. Again! And I wouldn’t be at all surprised if Unification were to suddenly occur this year or next — since the timing couldn’t be worse, and there’s no capability to get rich foreigners to stump for it.
Well, if all fails in Korea, you can go back to US or Britain. They are in excellent shape right now with their totally free market system and trade. It’s so much easier to get a job.
cm describes the essence of what being cm is.
…if Korea doesn’t work, leave Korea, so much easier to get a job…
Though there is a “Minerva”, you just might be “Cassandra” but give it a year or so.
“cm describes the essence of what being cm is.
…if Korea doesn’t work, leave Korea, so much easier to get a job…”
I guess you didn’t get my sarcasm.
Just wanna see if a Thai flag shows up.
And this should be interesting:
One friend of mine, a Samsung VP of Strategic Planning, just told me that he jumped ship for a smaller Samsung subsidiary. The pressure he was under was incredible and those great bonuses were no longer being paid.
When Samsung sneezes…
Well… Samsung is what?.. 20% of Korea’s GDP?
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