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Why did Korean domestic demand slow down after the Asian financial crisis?

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Title Why did Korean domestic demand slow down after the Asian financial crisis?
Author Whang, Unjung et al.
Publisher Sejong : Korea Institute for International Economic Policy
Publication Date 2015 - 12
Material Type Report
Country South Korea Holding KIEP: KDI School
Language English License
Series Title Policy Analysis

Abstract

Economic growth in Korea has slowed down dramatically after the Asian financial crisis of 1997. The average growth rate of real GDP of Korea before the crisis (1981-1996) was 9.3%, while it was reduced to 3.7% during the period (2003-2014) after the credit card lending boom following the financial crisis. Coincidently, the patterns of domestic demand growth before and after the crisis were similar to the GDP growth: the average growth rate of Korean real domestic demand was 8.8% and -0.3%, in the respective periods. This remarkable decline in both growth rates should not be attributed to the factors that are linked to the short-run economic fluctuations because these phenomena have lasted more then 10 years after the Asian financial crisis. Instead, structural factors related to the domestic market or exports are more likely to induce the significant declines in the growth of these two variables. (The rest omitted)

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