S.Korea expects GDP to grow 3.2 pct in 2021

Source: Xinhua| 2020-12-17 16:55:42|Editor: huaxia

SEOUL, Dec. 17 (Xinhua) -- South Korea expected real gross domestic product (GDP), adjusted for inflation, to grow 3.2 percent in 2021, after contracting this year amid an economic fallout from the COVID-19 pandemic.

The real GDP was forecast to rebound next year based on a scenario that massive vaccination campaign may begin in the second half of 2021, the Ministry of Economy and Finance said Thursday in its economic outlook report.

The Asian economy was predicted to slump 1.1 percent in 2020 due to the COVID-19 pandemic. The country's real GDP contracted only twice with declines of 1.6 percent in 1980 and 5.1 percent in 1998 each.

Other major institutes at home and abroad unveiled dimmer growth outlooks for the South Korean economy given that the government tightened its five-tier social-distancing rules to the second-highest amid the prolonged COVID-19 resurgence here.

The Bank of Korea (BOK) and the state-run Korea Development Institute (KDI) projected the economy to go up 3.0 percent and 3.1 percent each in 2021, while the 2021 outlooks from the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) stood at 2.9 percent and 2.8 percent respectively.

In the latest tally, South Korea reported 1,014 more cases of COVID-19 for the past 24 hours, lifting the total number of infections to 46,453. The daily caseload hovered above 100 for 40 straight days since Nov. 8.

Expectations ran high for the social-distancing guidelines to be toughened further to the highest level, or an actual shutdown to stop the operation of most of businesses, in the near future.

Private consumption was forecast to expand 3.1 percent in 2021 after diminishing 4.4 percent in 2020. The record-low policy rate was expected to prop up the consumer spending with borrowed money next year.

The BOK has left its benchmark interest rate unchanged at an all-time low of 0.50 percent since May.

Export, which accounts for about half of the export-driven economy, was projected to pick up 8.6 percent next year after retreating 6.2 percent this year.

Import was forecast to rebound 9.3 percent next year after sliding 7.5 percent this year.

Growth forecasts for facility investment and the investment in the construction segment were set at 4.8 percent and 1.0 percent each next year.

The number of jobs was forecast to increase 150,000 in 2021, while outlook for the employment rate among those aged 15-64 was placed at 65.9 percent for next year.

Outlook for current account surplus was set at 63.0 billion U.S. dollars in 2021, while headline inflation forecast was put at 1.1 percent.

The government planned to focus on boosting the lackluster consumer spending next year by increasing an income tax deduction on credit card spending, extending a consumption tax cut for car purchase and offering a refund for the purchase of energy-efficient home appliances.

To bolster employment next year, the government will provide financial support for private companies that hire workers while increasing employees in the public sector early next year. Enditem