South Korea’s ferry disaster in April is still casting a cloud over the economy, with the effect on consumer spending lasting longer than expected, the Bank of Korea said yesteryear.
More than 300 people died when the Sewol ferry sank on April 16, most of them students from the same high school. The tragedy plunged the country into deep mourning.
Growth in the second quarter was the slowest for more than a year, partly because of sluggish personal spending, and the central bank said consumer sentiment was still struggling to recover.
Photo: EPA
“The fallout from the disaster turned out to be longer-lasting than expected, even though its impact has been easing,” it said of Asia’s fourth-largest economy.
The recovery in consumer sentiment remains feeble and companies are delaying investment due to uncertainty over the economic outlook, the bank said in a report called the Golden Book.
The report was based on a survey of more than 800 companies conducted between late last month and early this month.
Out of the total, 154 firms involved in consumer services were polled separately on their concerns about the impact of the sinking.
Just more than half of those surveyed forecast that the disaster would depress their sales into next month, while about 30 percent expected the impact to continue until November and about 20 percent said it would linger until the end of the year.
The country’s GDP rose a seasonally adjusted 0.6 percent in April-to-June period from the previous quarter.
Citing sluggish domestic demand in the wake of the sinking, the South Korean Ministry of Finance last month cut its growth forecast for this year from 4.1 to 3.7 percent.
The government unveiled an approximately 41 trillion won (US$40 billion) stimulus package last month as South Korean Minister of Finance Choi Kyong-hwan warned of the risk of recession.
The package is made up of 11.7 trillion won in expanded spending and 29 trillion won in extra financing support.
The lion’s share will be spent this year, with 3 trillion won earmarked for the beginning of next year.
In addition to the economic effects, a political dispute has broken out over plans for an independent inquiry into the tragedy.
More than 130 lawmakers from the main opposition New Politics Alliance for Democracy party yesterday staged a sit-in for a second day at the South Korean National Assembly, paralyzing all parliamentary business.
They are protesting the ruling Saenuri Party’s refusal to set up a consultative body which would give victims’ families a role in discussing legislation needed to set up an inquiry into the tragedy.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to