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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Is Korea Decoupled from US Economic Fallout?

Is Korea Decoupled from US Economic Fallout?

HWANG In-Seong

Nov. 14, 2007

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The global credit crunch triggered by the U.S. subprime mortgage woes is clouding the prospects of Korea 's nascent economic upturn. The rebound became apparent in the second quarter, with the economy rising 1.7% from the previous quarter, the second highest jump since the forth quarter of 2003 (2.7%). Industrial output and service industry output in July rose 14.3% and 9.8% year-on-year, marking the second highest value since October 2002.

Signs of the subprime lending going wrong began to surface in February and became full blown in late June as banks, insurance companies, and hedge funds in the US began to show signs of distress. Some of the casualties have included bankruptcy of two Bear Stearns-managed hedge funds and the suspension of three asset-backed securities funds opened by BNP Paribas, France 's largest listed bank.

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