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| Posted: 25 July 2020 at 10:26 | IP Logged
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South Korea Falls Into Recession With Worst Contraction
in Decades
South Korea‘s economy slid into a recession with exports
plummeting in the second quarter as the coronavirus
pandemic hurt profits in some of the nation’s largest
industries from automobiles to refineries.To get more
news about
Binary option, you can visit wikifx news official
website.
While the headline reading matches the decline
recorded in 2008, the BOK said in a separate statement
that when counting to two decimal places, the contraction
was the worst since the 1998 Asian financial crisis. This
is the countrys first technical recession since 2003.
Reliant heavily on trade, South Korea took a hit as
global commerce collapsed during the pandemic, with
exports falling by more than 20% in April and May.
Finance Minister Hong Nam-ki said Thursday that last
quarter was likely the bottom of the downturn, and said
the economy can rebound as the export slump eases and
consumption gathers momentum.
“Korea‘s going through the largest period of
contraction in its history,” said Kim Young-ick, a
professor of economics at Seoul’s Sogang University.
“The earliest time we can expect the economy to be fully
back on track is probably the bottom half of next year.”
Some of South Korea‘s industries have managed to
benefit from the pandemic, with SK Hynix Inc., the
nation’s second-largest chipmaker, reporting a surge in
profit on Thursday. More traditional shipments such as
cars and oil products have taken a hit.
Accelerated Downturn
South Koreas economy probably peaked in the fall of
2017 and has since been losing momentum, and when the
pandemic hit, the pace of downturn accelerated, BOK
official Park Yang-su said Thursday at a briefing.
The BOK has slashed its interest rate to a record low
of 0.5% since the coronavirus hit, supporting government
efforts to shore up the economy. Governor Lee Ju-yeol
said last week that the economy would probably shrink by
more than the -0.2% forecast in May.
 24/637311821409497230/ART637311821409497230_252700.jpg-
wikifx_articlepic">
Watch: Angela Hsieh, regional economist at Barclays,
discusses the prospects for South Koreas economy, which
slid into a recession in the second quarter.
(Source: Bloomberg)
GDP export volumes plunged 17% from the previous
quarter while imports fell 7.4%. Facilities investment
fell 2.9% as companies cut spending on transportation
equipment. Private and government spending both increased
from the January-March period.
“We still expect exports to recover but it will be a
bumpy ride,” Angela Hsieh, an economist for Barclays
Bank PLC., told Bloomberg TV. Hsieh said last quarter was
likely the “trough”, adding policy makers will prefer
to look through the weakness and focus on reviving growth
momentum in the second half.
What Bloombergs Economist Says
“Looking ahead, we expect the economy to return to
growth in 3Q as global lockdowns are eased and fiscal and
monetary stimulus work its way through the economy. Even
so, the recovery will likely be gradual and uneven, as
ongoing outbreaks overseas and still-soft activity at
home remain significant challenges.
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Topic: South Korea Falls Into Recession With Wor
