SEOUL, July 23 (Xinhua) -- South Korea's second-quarter gross domestic product (GDP) hit the biggest fall in more than 22 years on the back of an economic fallout from the COVID-19 outbreak across the world, central bank data showed Thursday.
Real GDP, adjusted for inflation, dropped 3.3 percent in the April-June quarter from the previous three-month period, after sliding 1.3 percent in the January-March quarter, according to the Bank of Korea (BOK).
It was the fastest reduction in over 22 years since the first quarter of 1998 when the foreign exchange crisis roiled the South Korean economy and the real GDP plunged 6.8 percent on a quarterly basis.
From a year earlier, the real GDP slumped 2.9 percent in the second quarter. It was the biggest fall since the fourth quarter of 1998 when the real GDP slipped 3.8 percent on a yearly basis.
Minister of Economy and Finance Hong Nam-ki, who doubles as deputy prime minister for economic affairs, told a meeting to tackle the economic difficulty that an external shock from the COVID-19 was greater than expected despite a rebound in domestic demand.
Hong noted that the second-quarter GDP outcome was lower than forecast as the continued COVID-19 pandemic brought about a deeper-than-expected global economic downturn and negatively influenced the country's export.
He predicted that if the COVID-19 pandemic cools down, South Korea's third-quarter GDP could make a significant rebound, saying private consumption recovered recently thanks to policy effects, such as the government's offer of relief grant to all households and temporary tax cut for car purchase, as well as the resumed economic activity.
The COVID-19 pandemic weakened the global trade, hitting hard the outbound shipment of South Korea.
Export, which takes up about half of the export-driven economy, tumbled 16.6 percent in the second quarter from three months earlier.
It marked the biggest drop in 56 and a half years since the fourth quarter of 1963 when the export plunged 24.0 percent.
Import slipped 7.4 percent in the quarter due to the cheaper global crude oil.
Hit by the export shock, the second-quarter GDP fell faster than expected. The BOK estimated earlier that the real GDP may have retreated less than 3 percent in the April-June quarter.
Since South Korea's GDP data began to be compiled in 1953, the country logged a GDP decline only twice in 1980 and 1998.
The Organization for Economic Cooperation and Development (OECD) forecast in June that South Korea's real GDP would contract 1.2 percent in 2020 under a scenario that no second wave of the COVID-19 comes this year.
Signs of recovery were spotted recently. The country's export shrank 10.9 percent in June from a year earlier, but it slowed down from declines of 23.7 percent in May and 24.3 percent in April respectively.
Credit card spending increased 9.3 percent in June from a year earlier, after growing 5.3 percent in the prior month. It diminished for two straight months through April.
Revenue of department stores inched up 0.4 percent last month, marking the first turnaround in seven months. The sale of locally-made passenger vehicles in the domestic market jumped 44.9 percent in June on a yearly basis, after expanding 14.0 percent in the previous month.
Private consumption rose 1.4 percent in the second quarter from the previous quarter, and the fiscal spending grew 1.0 percent during the quarter.
Facility investment reduced 2.9 percent in the cited quarter, with investment in the construction sector skidding 1.3 percent.
Production among manufacturers plunged 9.7 percent, while output in the services industry dipped 1.1 percent.
To reinvigorate the flagging economy, the government unveiled the country's biggest-ever supplementary budget plan worth 35.1 trillion won (29.3 billion U.S. dollars) that was passed through the parliament earlier this month.
It announced a total of 250 trillion won (208.5 billion U.S. dollars) worth of stimulus packages to financially support micro-business owners, small firms and big corporations that suffered from losses caused by the virus outbreak.
The BOK cut its key rate by 25 basis points to an all-time low of 0.50 percent in May, after slashing the rate by 50 basis points in March.
The finance ministry expected the South Korean economy to grow 0.1 percent this year owing to fiscal stimulus packages and more accommodative monetary policy. Enditem
