Peak Oil is You

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Page added on July 30, 2006

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Tough times ahead for South Korea

Korea has long been a puzzle. With its high standard of living, work ethic and history of overcoming adversity, the nation of 48 million should be growing much faster … or at least getting more bang out of the growth it has.

Instead, surging crude-oil prices and rising global interest rates are leaving Korea vulnerable.

Korea probably isn’t about to slide into recession, and the risk of stagflation, or inflation rising faster than growth, seems remote. Yet the country is worth watching because it’s on the frontlines of a broader slowdown in Asia.
China is growing faster than 10 percent and India expanded 8.4 percent in the year ended March 31. Japan is stable again after 15 years of negligible growth and deflation. And Asia’s economies in general are in far better shape than they were nine years ago at the start of the region’s financial crisis.

Even so, growth in some of Asia’s biggest economies won’t be enough to overcome three headwinds gaining in intensity.

The first one is oil.

Ashbury Park Press

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