South Korea’s economy is expected to suffer its first annual contraction since the 1990s as a result of the COVID-19 pandemic, the Bank of Korea forecast yesterday as it cut interest rates to a record low.
The world’s 12th-largest economy is to shrink 0.2 percent, the central bank said, a dramatic downgrade from the 2.1 percent growth it had forecast in February.
The bank cut its key interest rate by 25 basis points to 0.5 percent, joining other central banks moving to try to stem the economic effects of the pandemic, which analysts have said threatens to cause a global recession.
“The growth of the domestic economy has slowed significantly” due to the novel coronavirus, and is expected to be sluggish and unpredictable in the future, the central bank said in a statement.
“The employment situation has deteriorated,” with many in the service sector losing jobs, while “exports fell significantly,” it said.
It is the second rate cut in three months, after a surprise 50 basis-point reduction to 0.75 percent in March.
South Korea is highly trade-dependent and saw its worst economic performance in more than a decade in the first quarter as the pandemic struck.
GDP shrank 1.4 percent year-on-year in the January-to-March period, its biggest decline since the fourth quarter of 2008 during the global financial crisis.
The IMF has forecast that the global economy would contract 3 percent this year, saying that it is expected to “experience its worst recession since the Great Depression” because of the novel coronavirus.
The IMF has predicted that the South Korean economy would shrink 1.2 percent this year.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS