South Korea’s exports have plunged 16.6% during the second quarter, hitting the lowest record in 56 years since the fourth quarter of 1963 when it fell by 24%, according to the Bank of Korea. The global pandemic has delivered a heavy blow to Asia’s fourth-largest economy which relies heavily on trade.
Korea’s gross domestic product (GDP) fell 3.3% from the previous quarter due to the impacts of the global economic contraction, following the minus 1.3% from the first quarter of this year.
In addition to posting negative growth for two consecutive quarters, it also marks the lowest in 22 years from the first quarter in 1998 when Korea experienced a financial crisis and the GDP decreased by 6.8%. It is also a 2.9% decline from the same period last year, and the slowest growth since the fourth quarter of 1998 when it posted minus 3.8%.
Imports such as crude oil also shrank by 7.4%, with facility investments and construction investments also seeing a 2.9% and 1.3% decline, respectively. This is on account of decreased investments in transportation equipment and constructions.
Private consumption increased by 1.4% mainly in durables such as automobiles and home appliances fueled by the government’s stimulus checks and reduced individual consumption tax. Government spending also increased by 1% as a result of increased expenditure.
The manufacturing industry and agriculture, forestry, and fishery industry declined by 9.7% each, and the service industry including retail, wholesale, food, transportation, and accommodations saw a 1.1% decline.
The gross domestic income (GDI) shrank by 2% which is still less than the GDP growth due to improved terms of trade.
“We will try our best to see a rebound starting from the third quarter,” said Hong Nam-ki, the Minister of Economy and Finance.
By Ikhwan Kim
<Edited by Danbee Lee>