SEOUL (AFP) – South Korea’s economy recorded its worst performance in more than 20 years in the second quarter, the central bank said yesterday, as the coronavirus pandemic hammered its exports.
Asia’s fourth-largest economy contracted 2.9 per cent year-on-year in the April-June period, the Bank of Korea (BOK) said.
It was the fastest decline since a 3.8 per cent drop in the fourth quarter of 1998, in the aftermath of the Asian financial crisis.
Quarter-on-quarter, it shrank 3.3 per cent, also the worst showing in more than 20 years.
South Korea endured one of the worst early outbreaks of the coronavirus outside mainland China, and while it never imposed a compulsory lockdown, strict social distancing was widely observed from March until it started loosening restrictions in May.
But its economy has been unable to escape the global impact of the pandemic.
The country is highly trade-dependent, and exports plunged 13.6 per cent year-on-year in Q2 – the sharpest decline since 1974, in the wake of the OPEC oil crisis.
The decline was driven by “decreases in motor vehicles and coal and petroleum products”, the Bank of Korea said in a statement.
The BOK forecast in May that the economy will shrink 0.2 per cent in 2020, a dramatic downgrade from its February forecast of 2.1 per cent growth.
But its governor Lee Ju-yeol said last week another downward revision to the prediction was “inevitable”, noting export declines were “deeper than previously expected”.
The International Monetary Fund (IMF) last month also cut its growth forecast for South Korea, predicting it would shrink 2.1 per cent this year – compared with an average eight per cent decline for the world’s advanced economies.