S&P Expects Korea's Economy to Shrink

  • By Ahn Joong-hyeon

    March 24, 2020 12:51

    Standard & Poor's has forecast negative growth for Korea this year due to the coronavirus outbreak, a first for one of the three major global credit ratings firms.

    On Monday, S&P slashed Korea's growth outlook for 2020 from 1.1 percent to -0.6 percent, down another 1.7 percentage points in less than 20 days. The last downward revision was from 1.6 percent to 1.1 percent on March 5.

    S&P projects consumer prices to fall 0.4 percent and unemployment to reach 4.2 percent this year. It also estimated Korea's benchmark interest rate at 0.5 percent by the year's end, down 0.25 percentage points from the current rate.

    The firm also predicted minus growth for Hong Kong (-1.7 percent), Singapore (-0.8 percent), and Japan (-1.2 percent) this year, and a mere 2.9 percent growth for China.

    Coronavirus will likely cause governments, banks, companies, and households in the Asia-Pacific region a combined economic loss of about US$620 billion, keeping growth in the region at just 2.7 percent, S&P predicted.

    Fitch and Moody's, the other two major credit ratings firms, have recently slashed growth projections for Korea to 0.8 percent and 1.4 percent.

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