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Bank of Korea predicts faster contraction of GDP

Christian Fernsby ▼ | June 3, 2020
South Korea’s economic contraction will worsen in the current quarter, the central bank forecast yesterday, as the coronavirus outbreak hits consumer demand and economic activity even harder.
Korea car factory
Forecast   Korea car factory
The Bank of Korea predicted the world’s 12th-biggest economy will shrink at least 2 percent in the April-June period over the previous three months.

Topics: Korea GDP

It already declined 1.3 percent quarter-on-quarter in the first three months, it said a slight improvement from its first announcement in April of a 1.4 percent contraction, but still the biggest drop in the nation’s GDP since the 2008 crisis.

Private consumption decreased 6.5 percent in January-March from the previous quarter “as expenditures on goods and services both decreased,” the bank said.

The South Korean Ministry of Trade, Industry and Energy on Monday reported that exports posted another double-digit decline in last month in a sign of continuing pain from the pandemic, with the automobile sector among the worst hit.

Overseas shipments fell 24 percent from a year earlier, slightly less than economists forecast. Shipments to China held up with just a 2.8 percent decline, while those to the US and the EU plummeted, the ministry said, adding that vehicle exports dropped more than half, while the value of auto parts shipments slipped by two-thirds.

Chip exports, South Korea’s biggest source of trade income, rose 7.1 percent, the ministry said.

The IMF has estimated the world economy will contract 3 percent this year, saying it is expected to “experience its worst recession since the Great Depression” over the pandemic, with South Korea’s economy shrinking 1.2 percent.