For some firms, South Korea's economy feels like it's already in recession

SEOUL - Mr Kang Dong-wan, the head of an electronic goods supplier for South Korea's biggest global brands, says it feels like Asia's fourth-largest economy is in a recession as business conditions have deteriorated further after a tough 2018.

The three big firms, whose combined revenue is equivalent to more than a fifth of South Korea's annual economic output of US$1.5 trillion , saw their profits tumble last year and had to cut orders placed on thousands of suppliers across the country.Mr Kang let go of 15 per cent of the staff last year and says that if the external environment continues to deteriorate another 30 per cent could be at risk.

The consensus view of economists is that South Korea will avoid an outright recession - two consecutive quarters of negative growth - thanks to the government's active implementation of budgeted spending plans for the year, though the risk of a slump keeps growing with each passing month. South Korea last slipped into a recession in 2009.

In fact, trading conditions appear to have deteriorated over recent quarters and have raised expectations that the Bank of Korea, which hiked interest rates in November, will likely cut them back as early as this month to boost domestic demand. Tonymoly Co Ltd, a South Korean cosmetic brand popular among Chinese customers, reported a 3.7 times larger operating losses in the first quarter, while operating profit of its peer Amorepacific Corp slid 20.9 per cent.

A business survey on Monday showed factory activity shrank the most in four months in June as the global trade slowdown deepened, prompting companies to cut back production and shed more jobs.A slight improvement in the job market this year after unemployment hit nine-year highs in January is being driven by state hiring, with the manufacturing and construction sectors bleeding jobs every month.

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