South Korea sees 2020 economic growth grinding to virtual halt By Reuters

South Korea sees 2020 economic growth grinding to virtual halt


© Reuters. FILE PHOTO: Women wearing masks to prevent contracting the coronavirus walks out of a shop at Dongseong-ro shopping street in central Daegu

By Joori Roh and Cynthia Kim

SEOUL (Reuters) – South Korea on Monday cut its economic projections for this year to growth of just 0.1%, which would be the worst performance since the 1998 Asian financial crisis, as the coronavirus pandemic hit exports, consumption and corporate investment.

That is sharply down from its previous projection of a 2.4% expansion made before the outbreak and comes after compiling a total of 250 trillion won stimulus package — 13.1% of gross domestic product — to combat the virus fallout.

The government’s view that growth will ground to a virtual halt is slightly better than an expected 0.2% contraction seen by the Bank of Korea, and a 1.2% decline projected by the International Monetary Fund.

“(The coronavirus outbreak) led to an unprecedented slump in domestic demand, which maximised fears and caused shock in financial and labour markets,” Deputy Finance Minister Bahng Ki-sun told a briefing prepared for the release on Monday.

“Recovery in domestic demand will likely be limited due to deepening slump in external demand and uneasy sentiment, and can worsen if the second wave materialises ahead of winter,” he added.

South Korea’s economy grew 2.0% in 2019 and the new growth target would be the slowest since a 5.1% contraction seen in 1998 Asian financial crisis.

Outside the coronavirus, tensions between China and the United States over Beijing’s policy on Hong Kong could further derail recovery, the nation’s finance ministry said.

Breakdown of forecasts showed private consumption for the whole of 2020 is expected to slip 1.2% from a year earlier, far worse than a projection of 2.1% growth set in December.

Exports are also expected to shrink 8.0%, sharply down from 3.0% growth seen earlier.

Factory shutdowns and various measures to contain the virus, including social activity restrictions, have hit household and business spending.

The BOK cut its policy rate to a record low last week, working in tandem with the government to extend liquidity to businesses hit by the coronavirus pandemic.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME