South Korean economy just recorded its worst shrank since the financial crisis of 2008 because of the COVID-19 pandemic assessed according to exports and consumer demand. Whereas, the worst may that be over yet. According to the Bank of Korea’s estimation, the fourth largest economy of Asia contracted 1.4%in the duration of January to March as compared to the fourth quarter of the previous year. The contraction was somewhat better than what analysts forecasts during poll by Refinitiv, but still the worst in over ten years.
South Korea’s economy just recorded its most severe contraction since the 2008 financial crisis due to the coronavirus pandemic — and the worst may not be over. https://t.co/oI1Rd6C6CZ
— CNN International (@cnni) April 23, 2020
The economy of South Korea still grew by around 1.3% when compared to one year prior. However, the growth rate was slower than the 2.3% growth that the 4th quarter experienced year-on-year. Consumer spending fell 6.4% from the previous quarter, while exports declined by 2%. South Korea was hit early by the coronavirus, and at one stage was epicenter to one of the largest outbreaks outside China. Since early March, however, the rate of daily coronavirus infections slowed dramatically. According to Johns Hopkins University, South Korea recorded approximately 10,700 cases to date, with about 238 deaths.
South Korean Government’s early testing efforts play a major role in controlling pandemic across the country
The government of South Korea has been among the most ambitious governments when it comes to offering easy and free virus testing facilities. Experts attributed the decline of South Korea in new COVID-19 cases to its early testing efforts. However, the economy of South Korea will still take a tough hit as the remaining world is still dealing with the pandemic, according to Alex Holmes, chief Asian economist for Capital Economics.
Holmes writes in a note that extensive lockdowns all over the world weigh severely on external demand, which will hit the export of Korea. According to the trade statistics from the first twenty days of April, exports jumped almost twenty-seven percent from one year ago. In the meantime, he says that local demand is not likely to recover too much this quarter as nationals continue to practice social distancing.