S.Korea's central bank revises up 2020 GDP forecast

Source: Xinhua| 2020-11-26 15:10:26|Editor: huaxia

SEOUL, Nov. 26 (Xinhua) -- South Korea's central bank on Thursday expected the economy to contract 1.1 percent in 2020, 0.2 percentage points higher than its outlook estimated three months earlier.

The Bank of Korea (BOK) predicted the real gross domestic product (GDP), adjusted for inflation, to grow 3.0 percent in 2021, 0.2 percentage points above the previous forecast in late August.

The real GDP shrank 1.3 percent in the first quarter and 3.2 percent in the second quarter each on a quarterly basis due to an economic fallout from the COVID-19 pandemic.

However, the real GDP increased 1.9 percent in the third quarter, leading to an upward revision in the BOK's economy forecast.

The country's GDP posted contraction only twice since data began to be compiled. The real GDP dived 1.6 percent in 1980 and 5.1 percent in 1998 respectively.

BOK Governor Lee Ju-yeol told an online press briefing after the bank's rate-setting meeting that most of the economic downturn could be moderated by the end of next year when the COVID-19 pandemic is forecast to be eased.

Lee, however, noted that the economy had yet to get back into a full recovery, citing the recent COVID-19 resurgence and the government's tightened quarantine regulations.

The government raised its five-tier social-distancing guidelines to the third-highest Level 2 in Seoul and its suburban metropolitan area from Tuesday, hitting hard the services industry, especially micro-business owners.

Under the Level 2 guidelines, restaurants are allowed to serve food until 9 p.m. local time, with takeout and delivery available afterward.

Only takeaway and delivery are allowed in coffee shops and cafes, while crowded facilities such as hair salon, gym, private cram school, internet cafe and public bathhouse are subject to limited capacity.

In the latest tally, South Korea reported 583 more cases of COVID-19 for the past 24 hours, raising the total number of infections to 32,318. The daily caseload marked the highest in 268 days since March 3.

To tackle an economic downturn from the COVID-19 resurgence, the BOK left its benchmark interest rate unchanged at an all-time low of 0.50 percent.

The BOK expected the country's export to reduce 1.6 percent in 2020, 2.9 percentage points higher than its forecast estimated three months earlier. The export was projected to rebound 5.3 percent next year.

The central bank said in its economic outlook report that the outbound shipment would maintain a recovery trend along with the recovering global economy and trade.

The BOK predicted private consumption to plunge 4.3 percent this year, 0.4 percentage points lower than the prior outlook in late August. The consumer spending was expected to expand 3.1 percent next year.

Facility investment was forecast to increase 5.7 percent in 2020 and 4.3 percent in 2021 respectively, while investment in the construction sector was expected to fall 0.7 percent this year and rise 0.5 percent next year each.

The number of jobs was projected to contract 200,000 this year before rebounding 130,000 next year.

Outlook for current account surplus was set at 65 billion U.S. dollars for this year and 60 billion U.S. dollars for next year each.

The consumer price index was forecast to rise 0.5 percent in 2020 and 1.0 percent in 2021 respectively. Enditem