clock menu more-arrow no yes

Filed under:

On heels of black Friday, S. Korea economic future looks grim

Bad as Friday looked in South Korea - and it looked bad, with news of a record high in bankruptcies and a record low in factory production - to many jittery South Koreans, the future looked even worse.

"A Looming Second Currency Crisis," one newspaper headline blared. "A March Crisis," trumpeted another.The worst predictions see South Korea's fragile banking system snapping like an overstretched rubber band next month, forcing thousands more companies into bankruptcy and throwing tens of thousands of workers out of their jobs.

So far, the scenario remains just that - a gloomy prediction - but the signs for South Korea's economy are bad, despite a $57 billion bailout by the International Monetary Fund.

A record 3,320 companies went bankrupt in January alone, according to a dismal government report released Friday.

The report also said the number of unemployed soared 42 percent from December to January, pushing the jobless rate to an 11-year high of 4.5 percent, or 934,000 people. The industrial output shrank by a record 10.3 percent in January.

"All this could result in . . . a second currency crisis," said Lee Jang-young, a research fellow at the Korea Institute of Finance, a think tank funded by South Korean commercial banks.