简体中文
By APD writer Alice
The rapid spead of the novel coronavirus disease (COVID-19) is threatening South Korea's fragile economic recovery and even cause the country to record a negative growth in the first quarter of this year.
South Korea's Deputy Finance Minister Kim Yong-beom said on February 24 that the epidemic is a major concern as it will limit the country’s economic recovery momentum that was rekindled late last year". Reduced domestic demand and exports to China are two of the noticeable impacts.
The KOSPI Index on the South Korean stock market plunged on February 24 morning, due to investors' concerns. The number of COVID-19 infections in the country has soared in the past week, from more than 30 to over 830 cases on February 24 afternoon . South Korean President Moon Jae-in has raised disease alert to the highest level for the first time since 2009.
The South Korean economy is often affected very early by fluctuations in the world, due to its heavy reliance on trade, especially with China. South Korea's imports from China fell by 19% in the first 20 days of February, indicating that the disease is seriously disrupting the global supply chain. South Korea's average daily exports also dropped by 9.3% year on year.
The local economy is expected to suffer even more, as the fear is spreading rapidly within the community, curbing economic activities. The South Korean government has urged people to avoid outdoor activities, limit religious services and delay the new school year.
Many foreign investment banks and economic research institutes have projected South Korea's growth to be below 2% in 2020, due to the COVID-19 outbreak. ING recently lowered its growth forecast for the South Korean economy from 2.2% to 1.7% this year. Similarly, Oxford Economics slashed its prediction from 2.2% to 1.8%.
Capital Economics, Nomura Securities and Morgan Stanley also said that South Korea's GDP increased by less than 2% this year as exports and domestic demand fall due to the epidemic.
South Korea is also suffering greatly from a decline in tourist arrivals and plummeting retail sales. The number of foreign visitors coming here decreased by 2.8% between January 20 and February 10 as compared to the same period last year, mainly due to fewer Chinese visitors.
Trading centers, restaurants and shops also lost revenue because people avoided going to crowded places. Some had to close after an infected person was found to have come there.
Some foreign organizations even forecast a negative growth for South Korea in the first quarter. Nomura said that in the worst scenario, the country's GDP would drop by 2.9% in Q1, while JP Morgan projected a fall of 0,3%.
Earlier, the Bank of Korea had forecast the local economy to expand only 2.3% in 2020. Last year, the country's GDP increased by 2% - the slowest in a decade - due to the impact of the US-China trade war.
(ASIA PACIFIC DAILY)
