Dire Prospects for Korean Economic Growth

  • By Choi Kyu-min

    August 12, 2020 12:20

    Korea's exports declined sharply again this month, raising doubts that any recovery can be achieved in the third quarter.

    According to the Korea Customs Service on Tuesday, exports plunged 23.6 percent on-year in the first 10 days of August to US$8.7 billion. The steep decline that started in April due to the coronavirus epidemic appeared to flatten slightly in June, when exports fell only seven percent, but now the curve is much steeper again.

    At the same time Korea's fiscal deficit reached new records until June. According to the Ministry of Economy and Finance, the managed budget balance, which indicates how well the government is managing its finances, fell into a W110.5 trillion deficit as of the end of June, almost doubling on-year (US$1=W1,185).

    /Yonhap

    The deficit stems from a sharp increase in spending, including aid money for those affected by the epidemic in the first half and decreased tax revenues. Now, mounting damage from heavy flooding have raised calls from lawmakers to put together a fourth supplementary budget.

    The OECD on Tuesday raised its 2020 economic growth forecast for Korea from -1.2 percent to -0.8 percent but maintained its projection for next year at just 3.1 percent.

    That would mean Korea ranks first in the rich-countries club this year but falls to 34th next year.

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