South Korea last year recorded its worst growth in more than two decades, the central bank said yesterday, but it is expected to be among the best-performing Organisation for Economic Co-operation and Development (OECD) economies in the wake of the COVID-19 pandemic.
The country’s GDP contracted 1 percent from a year earlier, the Bank of Korea (BOK) said, citing weak private spending and exports.
It marked the worst annual growth since 1998, when the South Korean economy shrank 5.1 percent in the aftermath of the Asian financial crisis.
Photo: AFP
Still, South Korea is expected to be among the countries in the OECD group of developed economies least affected by the pandemic.
In the fourth quarter of last year, South Korea’s economy — the world’s 12th-largest — grew 1.1 percent from the previous quarter, data showed, marking a second consecutive quarter of growth amid the pandemic.
The central bank said exports expanded 5.2 percent in the fourth quarter from three months earlier, offsetting a slump in private consumption due to toughened social distancing rules in the past few weeks.
South Korea has shown signs of recovery from the virus downturn and the central bank in November last year forecast the economy to grow 3 percent this year.
“Recovery momentum should gather pace from the second quarter onwards, led by strong export prospects as global growth and 5G deployment pick up speed,” Oxford Economics economist Lloyd Chan said.
“A vaccine rollout around February should also stimulate domestic demand, as it would reduce the need for stringent containment measures,” he said.
Last year, the South Korean government pledged fiscal stimulus of about 310 trillion won (US$280 billion), while the BOK cut interest rates by 75 basis points to 0.5 percent.
Most analysts expect the central bank to retain its accommodative policy stance this year.
“BOK will keep emphasizing financial stability, but that does not mean any unwinding of easier monetary policy adopted after COVID-19,” Meritz Securities Co economist Lee Seung-hoon said.
Additional reporting by Reuters
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