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South Korea has fallen into recession as the country recovers from the impact of the coronavirus pandemic.
Asia’s fourth largest economy experienced a 2.9% worse than expected drop in gross domestic product (GDP) year-on-year, the biggest decline since 1998.
Exports, which account for almost 40% of the economy, were the biggest burden as they fell the most since 1963.
In recent weeks, official figures have confirmed that both Japan and Singapore have also entered a recession.
But South Korea’s finance minister Hong Nam-ki remains optimistic that the economy will recover quickly.
“We may see a China-style rebound in the third quarter as the pandemic slows and activity in production, schools and hospitals abroad resumes,” Hong said.
So far, the South Korean government has implemented stimulus measures worth 277 trillion won (£ 181 billion; $ 231 billion) to address the effects of the pandemic on its economy.
However, authorities in the trade-dependent nation have little control over exports, ranging from memory chips for computers to automobiles.
In another indication of how Covid-19 has affected exporters in the region, Australia has reported its largest budget deficit since World War II.
The country has reached a deficit of A $ 85.8 billion (£ 48.1 billion; $ 61.3 billion) for the year that ended in June 2020.
Treasurer Josh Frydenberg also said the deficit is projected to grow to A $ 184.5 billion this financial year, as the pandemic pushes Australia into its first recession in three decades.
- Japan’s domestic spending plummets at record pace
- The coronavirus ‘could cost the global economy $ 8.8 trillion’
In May, Japan fell into recession for the first time since 2015, as the world’s third-largest economy contracted at an annual rate of 3.4% in the first three months of 2020.
Last week, official data showed that Singapore had fallen into a recession as second-quarter GDP contracted 12.6% yoy.
Authorities predict it will be Singapore’s worst recession since its independence from Malaysia in 1965.
But last week, China said it had avoided falling into recession as its economy grew 3.2% in the second quarter of the year after a record decline in the past three months.
The rebound followed the biggest contraction in the world’s second-largest economy since quarterly GDP records began.
