[한은 전망] 2.4% growth this year even in corona pessimism scenario’more than potential growth rate’

Soaring to 3.8% in optimistic scenarios, growing 3.1% next year
Lee Joo-yeol “If the 4th disaster subsidy is additionally reflected, the growth prospects will be higher”
Uncertainty on the growth path is high.. employment stagnation continues
Consumer price revised up to 1.3% this year, core inflation was the same as the previous forecast

Even if the development of the new coronavirus infection (Corona 19) is pessimistic, it is observed that the economic growth rate this year and next year will grow beyond the potential growth rate. In the optimistic scenario, it was expected to record high growth in the 3% range. However, the uncertainty of the growth path is high. In addition, the sluggish employment was expected to continue.

On the 25th, the Bank of Korea predicted economic growth rates of 3.0% and 2.5% this year and next year, respectively. This is the same as the previous forecast last November.

Externally, with the spread of Corona 19 differently by country, the spread of Corona 19 has gradually calmed down after the mid-to-late half of this year, and movement restrictions will be eased from this spring, recovering the level before the corona crisis in the second half of the year. Each of them is based on the premise that it will slow down at one speed and then gradually calm down in the middle and late this year.

On the other hand, if it is more pessimistic than the basic scenario, it is expected to grow 2.4% this year and 1.9% next year. However, considering the fact that the potential growth rate of the Korean economy is gradually falling from the early 2% range, this also maintained the growth trend at the level of the potential growth rate. Optimistically, they expected 3.8% this year and 3.1% next year.

It is expected that facility investment will continue to recover mainly in the information and communications (IT) sector, and the increase in investment in intellectual property products will increase due to increased investment in R&D. Construction investment, which had been sluggish, is expected to complete the adjustment flow and turn into a recovery phase. On the other hand, private consumption is expected to recover slowly due to the spread of Corona 19 and poor household income conditions.

In terms of contribution, domestic demand this year and next year are expected to record 1.5 percentage points and 1.8 percentage points, respectively, and exports are expected to record 1.5 percentage points and 0.7 percentage points, respectively. It is expected that domestic demand and exports will be balanced this year, gradually driving the growth of domestic demand.

As for the upper risk, he cited early calming down of the spread of Corona 19, expanding the recovery of the global semiconductor economy, and additional economic stimulus measures at home and abroad, and as for the down risk, he cited prolonged corona 19 spread, intensifying conflict between the US and China, and delayed improvement of employment conditions.

However, this is a figure that does not reflect the additional correction budget related to the 4th disaster support fund, which is in progress at a scale of 20 trillion won.

BOK Governor Lee Ju-yeol also said in a press conference immediately after the decision of the Financial Monetary Commission’s standard interest rate, “Exports have been rebounding rapidly since the second half of last year, and vaccines are spreading in major countries this year. Global terms of trade are being developed in a favorable direction in accordance with active fiscal stimulus measures such as the US. It is a positive aspect to the economy. He also said, “The 4th disaster subsidies and supplements were not reflected in this outlook. Once confirmed and implemented, that part will be a factor to raise the growth forecast.”

Employment is expected to remain sluggish, mainly in the face-to-face service industry. The number of employed is expected to decrease by 90,000 by the first half of this year. This is a significant decrease from the initial forecast of 50,000 people. During the year, it only increased by 80,000, far below the previous forecast (an increase of 130,000).

Consumer prices are forecasted at 1.3% this year and 1.4% next year. Compared to the initial forecast (1.0% this year, 1.5% next year), this is a 0.3 percentage point increase this year, but a 0.1 percentage point decrease next year. It is predicted that the domestic economy will improve, the international oil price rises, the downside pressure in terms of government policies related to education and communications, and the jeon and monthly rent price rise will drive inflation.

However, core inflation, excluding food and energy, was predicted to be 1.0% this year and 1.3% next year, the same as the previous forecast.

The current account surplus is expected to be $64 billion this year and $62 billion next year. This is an increase of $4 billion each from the previous forecast. However, the ratio of current account surplus to gross domestic product (GDP) is expected to gradually decrease from the mid-4% range in 2020 to the mid-3% range this year and the early 3% range next year.