The World Bank released a report warning of a global economic recession. Inventories of Korean local businesses hit a 26-year high, sending warning signals. The Korean won dollar exchange rate has continued to rise recently, even surpassing the 1,400 won per dollar mark at some point today. Fear of a possible global economic slowdown is spreading both locally and abroad.
The Korea Chamber of Commerce and Industry (KORCHAM) said on Friday that the manufacturers’ inventory index, which demonstrated the trend of industrial activities for the second quarter of 2022, rose 18.0 percent, a record high. in 26 years since the second quarter of 1996. (22.0%) when the Asian financial crisis was imminent. The inventory index is one of the main business forecast indicators released by Statistics Korea. It transforms business inventory volumes over a given time period into numbers and helps to better understand how much has increased or decreased. The KORCHAM analyzed that the index strongly indicates not only a temporary economic adjustment due to external factors, but a possible long-term slowdown in global activity starting in earnest.
On Thursday, the World Bank released a report titled “Is a Global Recession Looming?” which noted that a high 50-year global benchmark interest rate could have protracted financial consequences for emerging markets and developing economies. The report also warned that even a smaller shock could lead to a global economic slowdown due to numerous trade uncertainties, including the United States, China and Europe, the world’s three largest economies, possibly all plunging. in economic downturns at the same time.
The World Bank report wrote that central banks in many countries may need to raise the interest rate an additional two percentage points (higher than initial investor forecasts) to meet their low inflation targets, in which case the economic growth rate for the year 2023 could be decreased to 0.5% and the individual standard economic growth rate was reduced to -0.4%. According to the institution’s outlook, this can theoretically result in the global economy falling into a recession.
The Korean government has also warned for four consecutive months that the domestic economy may face a possible slowdown. “Against the backdrop of continued high inflation and declines in some economic sentiment indicators caused by external factors, there are fears of an economic slowdown such as a slowdown in export recovery in the future,” the Korean ministry said. of Economics and Finance in the September issue of its “Green Book (a monthly bulletin on current economic trends in the country).”
The won-Korean dollar exchange rate closed at 1,388 won in the foreign exchange market today after hitting 1,399 won, an increase of 5.3 won from the previous day. The highest exchange rate today was a 13-year-and-five-month high since March 31, 2009, when the rate hit 1,422 won.