Accessibility links

Credit Card Crisis Slows South Korea's Economy  - 2004-10-11


South Korea's economy experiences a slowdown, while safe deposit boxes at DBS Bank are destroyed during renovations.

South Korea's economy is slowing, with new industrial output figures showing that domestic consumers are not buying.

Dr. Ifzal Ali, Chief Economist at the Asian Development Bank, says a slowdown in consumer spending can be traced to credit controls imposed by credit card issuers after bad loans surged.

"The weakness in Korea is the result of the hangover of the credit card crisis which started last year," he said. "Consumer demand is very sluggish."

South Korea's central bank cut interest rates to a record low of less than four percent in August, in hopes of stimulating the economy. The government is urging the central bank to trim rates even more, but the bank is keeping rates stable because of inflation fears.

Dr. Ali says right now, the only factor fueling South Korea's economy is a rapid growth in exports.

DBS Bank says it will pay the 83 owners of safe deposit boxes removed and crushed as scrap metal about $6,000 each. The safe deposit boxes were mistakenly destroyed during renovations at a Hong Kong branch. The bank says it will offer an extra $13,000 to people who are willing to quickly settle claims against the bank.

DBS officials say the incident was an accident and say determining the true value of the boxes is difficult because only the owners know the box's contents.

In the Philippines, exports rose more than 13 percent in August from a year earlier. Analysts say the growth, which was worth more than $3 billion to the Philippine economy, was a result of stronger demand for electronics.

XS
SM
MD
LG