S.Korea's economy achieves good defense amid COVID-19 crisis
- Release Date：12-30-2020
South Korea achieved a relatively good defense in economic record this year compared to other Western countries, getting through the global COVID-19 crisis with smaller costs.
The country's real gross domestic product (GDP), adjusted for inflation, contracted 1.3 percent in the January-March quarter from three months earlier, before tumbling 3.2 percent during the April-June quarter.
The second-quarter result was the best among key economies, including members of the Organization for Economic Cooperation Development (OECD), except for China.
According to Bank of Korea (BOK) data, the real GDPs of Japan, the United States and Germany plunged 7.9 percent, 9.1 percent and 9.7 percent each, with Britain's real GDP dropping 20.4 percent in the second quarter on a quarterly basis.
South Korea's real GDP advanced 2.1 percent in the third quarter from the previous quarter thanks to a 16.0 percent turnaround in export, which accounts for about half of the export-driven economy.
Local exporters benefitted from a partial recovery in global demand in the third quarter as factories in key economies failed to operate normally during the first half amid the rigid shutdowns to contain the virus spread.
South Korea's decision to offer government relief grants to all households contributed to boosting domestic demand.
The handout was given on condition of being spent within three months, helping increase liquidity being circulated in every corner of the country and expand the revenue of microbusiness owners and the self-employed.
In late November, the BOK expected the country's real GDP to contract 1.1 percent in 2020. It was higher than the previous forecast of 1.3 percent contraction as the bank estimated that the worst had passed by for the economy.
The relatively good economic record was achieved with smaller fiscal costs. According to the OECD data announced earlier this month, South Korea's fiscal deficit for 2020 was estimated at 4.2 percent of its GDP.
It was the fourth-lowest among 42 major economies, behind Norway, Denmark and Sweden. The estimates for the United States, Britain and Japan reached 15.4 percent, 16.7 percent and 10.5 percent respectively.
According to the International Monetary Fund (IMF)'s fiscal monitor report in October, the fiscal deficit-to-GDP ratio for South Korea was estimated at 3.7 percent in 2020, far lower than 16.7 percent for the United States, 15.5 percent for Britain and 13.9 percent for Japan each.
Because of the COVID-19 resurgence here since November, worry emerged over a potential negative impact on the economy that may go beyond this year into the first quarter of next year.
The country's daily number of COVID-19 infections hovered around 1,000 for the past weeks, staying above 100 for more than seven weeks as of Monday.
The BOK forecast that the real GDP would rebound 3.0 percent in 2021, while the Ministry of Economy and Finance expected it to expand 3.2 percent next year. Those were higher than growth estimates of 2.9 percent from the IMF and 2.8 percent from the OECD each.