Is economic recovery in the making?

31-Oct-2020 Intellasia | KoreaTimes | 7:28 AM Print This Post

Despite ongoing market uncertainty, recent statistics show that the Korean economy saw a slow rebound during the third quarter of the year.

According to Statistics Korea, industrial production in the month of September increased by 2.3 percent from the previous month in all industry sectors except agriculture and fisheries; retail sales also rose 1.7 percent, and equipment investment also jumped 7.4 percent.

This “triple” increase in September ? economic indices’ improvement in production, sales and investment ?is the first since June this year.

The growth was also reflected in Bank of Korea’s (BOK) real GDP statistics. The BOK announced earlier this week that real GDP growth during the third quarter stood at 1.9 percent from the previous quarter.

The nation’s economy contracted 1.3 percent and 3.2 percent, respectively, during the first and second quarters. The second quarter performance was the worst since the fourth quarter of 2008 when the economy shrank 3.3 percent.

Market experts see that the positive figures in the third quarter, despite a resurgence in COVID-19 cases, mainly come from improved exports in the auto and semiconductor sectors, as the volume of exports in the third quarter grew by 15.6 percent from the previous one.

“The third quarter’s rebound was largely attributed to improvements in export volumes. The government’s passing of an extra budget also seemed to have had a positive effect on the economy, despite the heightened level of social distancing starting from August,” Park Sang-hyun, chief economist at HI Investment & Securities, told The Korea Times.

Other market experts also pointed out that the quarterly increase in exports led the economic rebound, yet whether it will continue will be dependent on recoveries in major global economies.

“Korean companies’ export figures in some sectors came out better than expected in the third quarter; since the global spread of COVID-19 hasn’t yet been controlled, any further increase in exports will depend on how major markets such as the US and Eurozone countries cope with the pandemic crisis,” said Cho Young-moo, a researcher at LG Economic Research Institute.

Park also said the potential development timeline of vaccines as well as the result of the upcoming US presidential election will all affect the country’s speed of recovery, noting that it’s still too early to judge with certainty whether the Korean economy is recovering.

“As the current market shows a great level of external instability, we need to watch the market for the time being to figure out whether the economic rebound will be V-shaped or W-shaped. It all relies upon issues such as the COVID-19 situation in major economies, the US presidential election result and vaccine development timelines,” the economist added.


Category: Korea

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