The low profitability of most Korean companies is a worry if the economy should stumble or if the U.S. The average profit margin ratio for all listed Korean companies has also been dropping, with a third of the top 20 percent of listed companies having missed revenue forecasts this year. The overall profitability of the top 20 chaebol has been worsening over the past four years, with only four chaebol reporting improving profit margins ― Samsung Group, Hyundai Motor Group, Lotte Group and Booyoung. But the government has reined in the heated housing market over the last few years by imposing strict loan-to-value ratios on mortgages.īut the good macro-economic news hides troubling news on the micro level. Borrowing to buy homes has been a main source of increased household debt. Central government debt is only 35 percent of GDP, while the fiscal deficit is likely to be only 1.8 percent of GDP this year.Ĭredit growth relative to nominal GDP has been brought under control, ending the profligate bank lending that caused Korea to suffer damaging debt crises in the past. It enjoys a healthy current account surplus, which reached a 15-year high in August, boosted by a flood of free-spending Chinese tourists. Korea has other strengths when compared to countries awash in government debt, including those of the U.S., Japan and many European countries. Investors have been attracted by the market's low valuations, but also the belief that Korean exports will grow as the global economy gradually recovers from the global financial crisis five years ago. was starting to ease its policy of easy money, foreign funds were flowing into the Korean stock market. While money was being pulled out of other emerging markets by foreign investors this summer on worries that the U.S. Indeed, Korea is now regarded as a safe haven by foreign investors. Gross domestic product grew by 1.5 percent since mid-2012 before accelerating to 2.3 percent in the second quarter of this year. Growth is slow but steady ― and improving. Once known for its volatile economic swings, Korea is boringly calm nowadays. Despite talk of debt problems among mid-sized chaebol and households, Korea is currently enjoying what could be described as a Goldilocks economy: neither too hot that it causes inflation nor too cold that it results in a recession.
0 kommentar(er)
