New Year's Prospects for the Korean Economy
|Author||Chang, Ji-sang||Date||2021.01.01||Issue No||102|
The Year of the Ox has dawned. I wish a very Happy New Year to all readers of i-KIET Issues & Analysis and I thank you for your unwavering support for this publication.
The year 2020 was one of considerable hardship for our economy. We witnessed the first instance of negative growth since the 1997 Asian financial crisis, with sharp decreases in consumption and exports due to the COVID-19 pandemic. However, after the bottoming-out of major economic indices, the government’s unprecedented and timely policy response and widespread public adherence to quarantine rules made it possible for our economy to rebound more quickly than expected. As a result, expectations are currently very high for Korea’s early recovery from the economic side effects of COVID-19.
The year 2021 will be the year in which we climb out of the valley of recession and return to the path of recovery. Uncertainty surrounding COVID-19 is still the variable that we are all the most concerned about. Despite this, gradual improvements in both domestic and international consumption and the base effect of 2020 (due to negative growth) are expected to result in a 2021 growth rate of 3.2 percent. Exports are expected to return to an upward trend in the automobile, shipbuilding, and general machinery industries, while industries that maintained strong performances throughout the COVID-19 pandemic, including info-communications devices, semiconductors, and rechargeable batteries, are expected to continue to do well.
However, this optimistic outlook for economic normalization in 2021 after the ravages of COVID-19 must be tempered by the reality that internal and external factors which constrain our economy remain formidable. For the quickest possible recovery of Korea’s economy, now is the time for a combined and concerted effort by the public and the private sectors. KIET will redouble its efforts in analyzing the status of the real economy and developing appropriate policies for it. We also hope to be of help in re-invigorating the domestic economy and our industries.
I hope all of our readers are blessed with fortune and happiness in their homes and workplaces throughout 2021. KIET promises to fulfill our responsibilities as a think tank that enhances Korea’s industrial development.？