August 15, 2011 12:33
Korea's dependence on foreign trade has risen to levels not seen since the global financial crisis in 2008. According to the Bank of Korea on Sunday, the ratio of trade to GDP stood at 110.1 percent in the first quarter, the highest since the 114.6 percent in the fourth quarter of 2008. The higher the ratio, the more dependent the economy is on foreign trade.
The ratio had been in the 90 percent range since 2009 before exceeding 100 percent to reach 103 percent in the second quarter last year.
In 2009, Korea's ratio was much higher at 95.9 percent than in other countries, including Japan (24.8 percent), the U.S. (25.1 percent), China (49.1 percent), the U.K. (57.7 percent) and Germany (76.7 percent). Higher dependency on foreign trade means a country's economy becomes more vulnerable to uncertainties abroad.
According to t According to the International Monetary Fund, in the fourth quarter of 2008 the Korean economy contracted 4.6 percent on-quarter, compared to Japan's 3 percent, Germany's 2.1 percent and Mexico's 1.5 percent. Even the U.S., where the financial crisis originated then, fared better with a 2.3 percent drop.
However, some experts say that since Korea has decreased dependence on exports to advanced economies by diversifying destinations, the latest crisis fueled by the U.S. credit rating downgrade would not deal a huge blow to the country.
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