South Korea plunged into an economic recession in the second quarter as the coronavirus pandemic hurt exports and crippled industrial activity. Data from the Bank of Korea showed the country’s GDP contracted by a seasonally adjusted 3.3% or 2.9% in year-on-year terms in the period, marking the worst contraction since the fourth quarter of 1998 and below market expectations of a 2% fall.
Exports, which accounted for nearly 40% of the country’s economy, fell 16.6% quarter-on-quarter in Q2, the worst performance since 1963. Construction investment dropped 1.3%, while capital investment slipped 2.9% over the same period. The output from the service and manufacturing sectors decreased by 1.1% and 9%, respectively. Private consumption gained 1.4% thanks to the government stimulus to boost spending.
Previously, Japan, Thailand, and Singapore also reported a technical recession, which is defined as two consecutive quarters of economic contraction. The coronavirus has slammed Asian economies with great exposure to trade.
The IMF estimates that South Korea’s GDP would see a 2.1% contraction for the whole of 2020, but analysts expect the country’s economy would recover quickly and post a modest decline of 0.4% in 2020. BOK governor last week said the current official projection of a 0.2% decline for 2020 might be revised further downward.
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Published on July 24, 2020 5:53 PM (GMT+8)Last Updated on July 24, 2020 5:53 PM (GMT+8)
