Current Korea
Faster Recovery
Key indexes such as exports, GDP and domestic consumption show how Korea is slowly recovering from the prolonged economic fallout due to the COVID-19 pandemic faster than other countries. Though a massive slowdown has ensued because of the outbreak, the government¡¯s swift and effective handling of the crisis makes Korea far less susceptible to contraction than other economies worldwide.
Written by• Sohn Ji-ae
A crowded department store on Aug. 9 in Seoul is one of many positive signs of the Korean economy¡¯s slow- but-steady recovery. © YonhapNews
Having posted negative growth for two consecutive quarters this year due to the COVID-19 pandemic, the Korean economy showed signs of recovery in the third quarter according to major indexes.
In short, the nation is on the fast track toward economic recovery despite the pandemic.
Prompt Response
The upswing in Korea¡¯s economic per- formance is what President Moon Jae-in expected to see starting in the third quarter, as he told a Cabinet meeting on July 27, ¡°If the government and private sector¡¯s efforts are combined, we expect that the economy will rebound beginning in the third quarter.¡±
With the world¡¯s new norms being wearing masks and social distancing, Korea has seen daily life and business starting to return to normal and regain vitality faster than any other country amid the pandemic.
Many governments and international organizations attribute Korea¡¯s fast recovery to its resolute and successful response to the pandemic, as well as well-devised economic and fiscal actions to deal with the unpre- cedented crisis
The OECD on Aug. 11 said, ¡°The prompt and effective reaction of the Korean authori- ties to contain the spread of COVID-19 limited the impact of the pandemic on the economy,¡± adding, ¡°Strong fiscal and monetary policy measures were quickly implemented to support households and businesses. As a result, the Korean economy is set to contract much less than other OECD economies in 2020.¡±
The OECD also predicted that Asia¡¯s fourth-largest economy would contract 0.8% this year, up from its prediction of 1.2% made in June and far better than the OECD average contraction of 7.5%.
The OECD¡¯s forecasts for economic growth for ten member states show Korea at the top of the heap. (Minis- try of Economy and Finance)
¡¤ Korea¡¯s rate of export decline has steadily improved since the full effect of COVID-10 was felt from April, falling to the single digit level ¦¡ 7% ¦¡ in July, a huge drop from 25.5% in April and 23.7% in May, the Ministry of Trade, Industry and Energy said on Aug. 1.
¡¤ According to the Organisation for Economic Co-operation and Development (OECD) on Aug. 2, Korea¡¯s GDP decline in this year¡¯s second quarter from the first ¦¡ 3.3% ¦¡ was far better than other major economies such as the U.S. (9.5%), Germany (10.1%), (France 13.8%) and Spain (18.5%).
¡¤ The Financial Supervisory Service on Aug. 10 released a report saying net foreign stock purchases in July hit KRW 582 billion on the Korean stock market.
Promise of Korean New Deal
Experts said that though the economy is recovering, the nation still faces major challenges ahead since sectors like tourism, transportation and entertainment will keep suffering from pandemic-related closures.
The OECD, however, said it hopes that the Moon administration¡¯s Korean New Deal will ease the economic strain and help the economy weather the crisis.
¡°Investment in areas featuring in the recent Korean New Deal, such as 5G, tele- communication and artificial intelligence, will help boost the knowledge-based economy,¡± it said.
Pres. Moon also expressed his confidence in the Korean New Deal in a Cabinet meeting on Aug. 11, saying, ¡°Korea is expected to see the highest economic growth out of the 37 OECD member states and is seen as a country that most effectively defends against COVID- 19, due to its swift economic policies based on fiscal expansion and strong implementation of the Korean New Deal.¡±
