South Korean economy shrinks 1.4% over coronavirus

SEOUL, South Korea – South Korea’s economy saw its worst performance in more than a decade in the 1st quarter as the coronavirus pandemic raged across the country, the central bank said on Thursday, April 23, with officials warning of a bigger impact still to come.

The world’s 12th largest economy endured one of the worst early outbreaks of the disease outside China, although it appears to have largely been contained thanks to an extensive “trace, test, and treat” program. (READ: Coronavirus test kits pour off South Korean production line)

The country has introduced a widespread physical distancing campaign since February, urging people to stay home, with scores of events – from K-pop concerts to sports matches – canceled and museums and art galleries closed.

Gross domestic product shrank 1.4% year-on-year during the January to March period, the Bank of Korea said, its biggest decline since the 4th quarter of 2008 during the global financial crisis.

Private consumption fell 6.4% – the sharpest fall in more than two decades – “as expenditures on goods and services both decrease,” the central bank said.

The South is highly trade-dependent and it added that exports contracted by 2% due to decreases in automobiles, machinery, and chemical products, while imports fell 4.1%.

But officials warned of a bigger impact from the coronavirus pandemic in the coming months.

“There are concerns that shocks to the real economy and employment may expand due to the global economic slump,” finance minister Hong Nam-ki told a meeting of other ministers.

The International Monetary Fund (IMF) has forecast the world economy will contract 3% this year, as it is expected to “experience its worst recession since the Great Depression” over the pandemic.

The IMF has predicted the South Korean economy will shrink 1.2% in 2020. – Rappler.com