( Seoul, 23rd July 2020 ) The Bank of Korea announced that the gross domestic product (GDP) for the second quarter of this year shrank by 3.3% quarter-on-quarter, regressing for two consecutive quarters, and hitting the lowest level in a single quarter after a 6.8% drop in the first quarter of 1998.
South Korea’s GDP contracted 1.3% in the first quarter. The economy is in recession due to the heavy blow to this export-dependent country by the new crown epidemic. GDP contracted another 3.3% in the second quarter. This latest data is South Korea’s worst performance since the worst of the Asian financial crisis in the first quarter of 1998. It is lower than the median forecast of economists surveyed by the Wall Street Journal, which is a 2.4% quarter-on-quarter decline.
Exports plummeted by 16.6%
Due to weak demand in the automotive and petrochemical industries, exports fell by 16.6% in the second quarter, setting a record low in more than 56 years after a 24% drop in the fourth quarter of 1963. Imports also fell by 7.4%. Equipment investment and construction investment decreased by 2.9% and 1.3% respectively. Resident consumption increased by 1.4% driven by anti-epidemic subsidies. In addition, the manufacturing sector in the second quarter fell 9% and 6.7% quarterly and year-on-year; retail trade, accommodation and food service industries fell 3.4% and 5.9% quarter-to-quarter and year-on-year. On a year-on-year comparison, South Korea’s GDP contracted by 2.9% in the second quarter and grew by 1.4% in the first quarter.
The Bank of Korea stated that the South Korean economy has been in a slow decline after reaching its peak from September to October 2017. Recently affected by the new crown epidemic, the rate of decline has accelerated further.
Looking ahead to the economic performance in the third quarter, the Bank of Korea believes that even if the second wave of the new crown epidemic breaks out, countries may not strengthen blockade and isolation to avoid economic contraction. The rapid rebound of China's GDP in the second quarter will help South Korea's economy improve.
On the other hand, South Korean Finance Minister Hong Nam-ki said at a government meeting that South Korea will take all available measures to achieve economic recovery in the third quarter. As part of South Korea’s New Deal, the government will promote private sector construction projects worth more than 30 trillion won.
**Info & Image are taken online
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