South Korea: counting the economic cost of THAAD

Chinese retaliation over South Korea’s deployment of the US Terminal High Altitude Defense (THAAD) system has led to a sharp slump in Chinese tourist arrivals in South Korea and a big fall in Korean automotive exports to China, both of which weighed heavily on Korean growth last quarter. However, provided China does not introduce further retaliatory measures, which seems unlikely, GDP growth should accelerate strongly this quarter.

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