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The national research institute, the Korea Development Institute (KDI), lowered its growth rate forecast, forecasting that the Korean economy will register negative growth of -1.1% this year and that the growth rate will be only 0.1%. 3.5% next year.
The figures fell by 1.3 percentage points and 0.4 percentage points, respectively, compared to those presented in May, reflecting the fact that the economic recession is broader and the economic recovery is more likely to be delayed due to the reproliferation of the new coronavirus infection (Corona 19).
On the 8th, KDI announced a “modified economic outlook” with this content.
KDI’s forecast for this year’s growth rate is higher than that of the International Monetary Fund (IMF, -2.1%), the Organization for Economic Cooperation and Development (second OECD differential standard, -2 , 0%) and the Bank of Korea (-1.3%).
It is lower than that of national private research institutes such as the LG Economic Research Institute (-1.0%) and the Hyundai Economic Research Institute (-0.5%).
Earlier, the government admitted negative growth, saying that it is not easy to achieve this year’s growth target (0.1%), which was announced in early June, given the possibility of a delayed economic rebound due to the reproliferation of Crown 19.
KDI cited the possibility of delaying the economic recovery due to the reproliferation of Corona 19 as a backdrop to lower its growth rate forecast.
This reflects the fact that the Corona 19 spread is not the ‘base case’ that was established in last May’s prediction, but the fact that it is developing in a similar way to the ‘subscenario’ where the growth rate in second half is less than in the first half.
“If the growth rate is -1.1% this year and 3.5% the next, it will grow at an annual average of 1.2%, which is considerably lower than the potential growth rate.”
It implies that it will not be easy for our economy to reach its normal path even next year, “he said.” The speed of our economy’s recovery will be quite slow and, according to the forecast presented this time, it is not a ‘V-shaped recovery.’
He added that “this year’s growth rate forecast of -1.1% is based on the premise that the Corona 19 spread will decrease in September and social distancing in the fourth quarter will not go to the third stage, for so if it goes to the third stage, the growth rate will fall even more. ” .
KDI predicted that private consumption is expected to decline by 2.0% this year and increase by 5.3% next year in the May forecast, but is expected to decline by 4.6% this year and then only rebound slightly (2.7% ) next year.
Consumption activities were limited due to concerns about infection, and private consumption was difficult to improve in a short period of time as revenues declined due to the economic slowdown.
Exports were also down to -4.2% this year and 3.4% next year from -3.4% this year and 4.9% next year in the May forecast.
Starting in the second half of this year, the produce division is expected to gradually ease the depression, but the recovery is expected to be slow.
The current account is projected to post a surplus of $ 57 billion this year, with exports contracting due to the global economic recession, but a slight rebound of $ 58 billion next year.
Investment in facilities showed a modest recovery this year (4.2%) and next (4.8%) due to last year’s base effect and the recovery in global semiconductor demand, and investment in construction also improved mainly in SOC, 1.1% this year and 3.1 next. It is expected to increase in%.
Consumer inflation rates for this year and next were 0.5% and 0.7%, and the unemployment rate was 4.0% and 4.1%.
This year’s increase in the number of people employed was revised to “ reduce 150,000 people ” from the forecast of 0 in May, and is expected to rise by 150,000 next year.
KDI predicted that the growth path of the Korean economy will change significantly depending on the extent and duration of the Corona 19 spread when presenting this revised forecast.
If COVID-19 treatments and vaccines are developed early and widely and stably supplied, there is a chance that the economic recovery will advance faster than expected next year, mainly in the service industry, but the high spread of Corona 19 at home and abroad will continue and social distancing will be further strengthened. If so, there is a possibility that the economic recession will widen and the economic recovery will move more slowly.
At the same time, the sharp confrontation between the United States and China could serve as an additional negative factor for the growth of the Korean economy, where dependence on exports from the two countries is high.
In response, KDI suggested: “For the time being, it is necessary to operate economic policies with an emphasis on supporting the Corona 19 crisis and maintaining the economic and social system.”
For the time being, fiscal policy should focus on protecting vulnerable groups affected by Corona 19 as the top priority for quarantine support for now, and monetary policy should be eased in response to the economic slowdown and low prices. . He said it was necessary to maintain the enemy posture.
/ yunhap news
