Credit Card Crisis Slows South Korea's Economy

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.

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