The causation of shrink in Export
South Korea are experiencing decline in exports in April. For the fifth straight month, the export rate have decreased because China have dragged plummeting shipments and as Sino-U.S. trade frictions take their toll on Asia’s Fourth-largest economy.
Due to this problems, the export shrank 8.2 percent on March. Economist says that shrinking exports in South Korea will dent the economy. Since South Korea have experienced worst quarter when the global finance crisis has happened, investments and exports have decreased which led to decrease in Aggregate Demand.
From this continuous unfavorable conditions, Analysts forecast the April headline inflation rate at 0.4 percent which was the same rate at March. Due to the lower rate of inflation, the central bank’s ultimate goal are still not reached. Since there were slump on investment and exports from January to March, aggregate demand have decrease which have influenced inflation rate. Therefore, to reach 2 percent of inflation, the government should make a decision to recover the economy.