South Korea economy shrank in 2020 for first time in 22 years: Central bank

SEOUL, SOUTH KOREA (AP) — South Korea’s central bank said the country’s economy shrank for the first time in 22 years in 2020 as the coronavirus pandemic destroyed service industry jobs and depressed consumer spending.

Preliminary data released by the Bank of Korea yesterday showed the country’s gross domestic product last year contracted one per cent from 2019. It was the first annual contraction since 1998, when South Korea was in the midst of a crippling financial crisis.

The economy would have been even worse if not for the country’s technology exports, which saw increased demand driven by personal computers and servers as the pandemic forced millions around the world to work at home.

The bank expects South Korea’s economy to manage a modest recovery this year driven by exports. But it said it would take a longer time for the job market to recover from the damage to services industries such as restaurants and transportation.

The bank since March last year has maintained its policy rate at an all-time low of 0.5 per cent to help pump money into the economy. But experts said traditional financial tools aimed at lowering borrowing costs have had only limited effect during the pandemic that has damaged both supply and demand.

The country reported another new 424 cases of the coronavirus yesterday, bringing its national caseload to 91,240, including 1,619 deaths.