South Korea’s gross domestic product contracted 0.4% in Q4 2022. Exports fell and consumer spending edged down in response to rising interest rates. Bank of Korea (BOK) governor Rhee Chang-yong had warned of the possibility of a contraction earlier this month when he delivered a quarter-percentage-point interest rate increase. For 2022 as a whole, the economy expanded 2.6% from a year earlier, in line with an earlier BOK projection. An economic slowdown in China particularly hurt Korean exports last year. Policymakers are also concerned about the potential impact of growing US curbs on China over its semiconductor exports, given that South Korea has large chip making facilities in the country. Duncan Wrigley, an economist at Pantheon Macroeconomics, said Korean exports will likely remain on a downward trend given the poor economic prospects in its major markets.