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Korean Economic and Industrial Outlook for the Second Half of 2020

Author Economic Outlook and Analysis Division Date 2020.08.31 Series
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In 2020, the Korean economy is expected to grow 0.1 percent from the previous year amid the COVID-19 pandemic, due to continued sluggish exports, the transition of consumption to a negative trend, and limited recovery in investment demand. The future trajectory of the pandemic is the most significant factor for the domestic and international economies. In addition, the trends of policy effects in major economies, U.S.-China trade tensions, consumer sentiment, and effects of the Korean government’s policies will affect the economy as well.

Consumption is expected to drop off from the last year, due to falling real income, deteriorating employment, and growing uncertainty in the global economy. Facilities investment will increase moderately, given investments in the semiconductor industry underway in preparation for post-COVID-19 business  expansion, but overall sluggishness caused by the depressed global economy will rein in expansionary spending. Construction investment will likely decline, owing to a slump in the private sector caused by government regulations on real estate and the effects of COVID-19. Exports will depend on whether the pandemic persists, but in the second half of the year, slumping exports will gradually pick up if countries such as China enter a recovery phase. Yet against this backdrop, total exports in 2020 are expected to drop by 9.1 percent.