South Korea's economy marked the worst gross domestic product (GDP) since the 2008 global financial crisis on the economic fallout from the COVID-19 outbreak, central bank data showed Thursday.
Real GDP, adjusted for inflation, contracted 1.4 percent in the January-March quarter from the previous three-month period, after growing 1.2 percent in the prior quarter, according to the Bank of Korea (BOK).
It was the worst in over 11 years since the real GDP tumbled 3.3 percent in the fourth quarter of 2008 on the back of the global financial crisis that roiled the global economy.
From a year earlier, the real GDP rose 1.3 percent, but it was the lowest in 10 and a half years since the third quarter of 2009.
The COVID-19 outbreak hit hardest private consumption as consumers refrained from outside activity such as travel, shopping and eating out while avoiding social gatherings and religious services.
Consumer spending plunged 6.4 percent in the first quarter from the previous quarter, posting the worse since the first quarter of 1998 when the foreign exchange crisis rattled the South Korean economy.
The private consumption pulled down the real GDP by 3.1 percentage points.
Export, which accounts for about half of the export-driven economy, reduced 2.0 percent in the quarter.
Shipments of automobiles, machinery and chemical products declined in the March quarter, offsetting solid demand for locally-made semiconductors.
The BOK forecast that the worsened labor market conditions in March will negatively influence the domestic demand, saying the export would be negatively affected by the weakening of the global demand, caused by the coronavirus pandemic across the world.
The number of jobs dipped 195,000 in March from a year earlier, marking the first employment fall in over 10 years since January 2010. The COVID-19 outbreak led companies, especially small firms and microbusiness owners, to cut or lay off employees.
South Korea's economy was expected to shrink 1.2 percent this year, after growing 2.0 percent last year, according to the International Monetary Fund (IMF)'s recently released World Economic Outlook report that forecast that the global economy would decline 3 percent in 2020.
Advanced economies were predicted to dive 6.1 percent this year, while emerging market and developing economies were set to fall 1.0 percent, according to the IMF report.
South Korea's fiscal spending gained 0.9 percent in the first quarter from three months earlier, after expanding 2.5 percent in the previous quarter. The government front-loaded budget spending in the first quarter to tackle the virus spread.
Facility investment added 0.2 percent on investment in the transport equipment sector, and construction investment increased 1.3 percent on a quarterly basis.
By industry, production among services companies retreated 2.0 percent in the first quarter compared to the prior quarter, marking the worst since the output of the services industry dropped 6.2 percent in the first quarter of 1998.
Output in the wholesale and retail sector diminished 6.5 percent, while the production in the transport sector dived 12.6 percent during the quarter.
Production among manufacturers slipped 1.8 percent in the quarter on the reduction of production in the transport equipment and the primary metal-making sectors that was offset by an increased output among chipmakers.
Source: Xinhua |
