Home Asia The Pandemic Hits South Korean Economy; Plummets into Recession

The Pandemic Hits South Korean Economy; Plummets into Recession

South Korean Economy

South Korean Economy

In the early phase of the pandemic, one of the worst suffering countries after China was South Korea. In February, it had recorded about 900 new daily cases a day. But by implementing aggressive mitigatory measures in the form of intensive tracking and tracing campaigns, South Korea was able to bring down the numbers to as low as single digit daily figures.

South Korea is Asia’s fourth-largest economy. Thuis year its economy has recorded the worst fall in GDP since 1998 which was recorded at 2.9% on a year-on-year basis. This is the poorest  recorded performance of the South Korean economy in over 20 years due to declining exports as a corollary of the coronavirus pandemic.

South Korea has a highly trade reliant economy and exports make up about 40% of the country’s economy.  Owing to the ongoing global health crisis, South Korea’s exports fell by a whooping 13.6%  as compared to last year,  in the second quarter. This is the steepest decline that the country’s exports have witnessed since the OPEC oil crisis in 1974.

The region’s exporters have been adversely hit by the Covid-19 crisis as it has plunged Australia into its very first recession in nearly 30 years. Australia has reported its biggest deficit since 1947. In May, the world’s third largest economy, Japan, was pushed into recession for the first time after 2015 and the official data revealed last week that Singapore had also entered its recession phase.

But South Korea’s finance minister Hong Nam-ki maintained an optimistic front. He believes that the economy will promptly resume to its former status. He was recorded quoting, “It’s possible for us to see China-style rebound in the third quarter as the pandemic slows and activity in overseas production, schools and hospitals resume.”

The government in South Korea has actively taken measures to deal with the economic repercussions of the pandemic in the form of nearly 277 trillion won (£181bn; $231bn) worth of stimulus efforts.  Nonetheless, the fact that the government regulatory authorities do not have much power over the trade dependent economy, makes swift recovery rather uncertain.