On the afternoon of the 10th, inquiries about rentals are posted to shopping streets in Myeong-dong, Jung-gu, Seoul. According to the National Statistical Office on that day, the number of employed people decreased to the maximum in 22 years and 1 month due to the prolonged corona 19 pandemic. In particular, the face-to-face service sector was hit directly. News 1
The Bank of Korea predicts that the Korean economy will grow 3.0% this year. This is a result of reflecting the prospects that exports, which are the’corner of trust’ in the Korean economy, will improve and facility investment will also recover.
However, among experts, there is an analysis that it is difficult for the economy to achieve a large rebound this year due to the variable of the spread of Corona 19 and the slow recovery of employment and private consumption. There is also growing concern that the Korean economy will not be able to escape from the low-growth swamp for a long time if the coronavirus population immunity is formed later than expected due to vaccination disruptions.
Export and investment increase, but employment and consumption’deteriorate’
The BOK predicted that this year’s real gross domestic product (GDP) would be 3.0% through its’Economic Outlook’ report on the 25th. The previous forecast announced in November last year was maintained. The growth rate for next year also remained at 2.5%.
The BOK predicts that exports will lead the economic growth this year, and suggested an export growth rate of 7.1%. This is an increase of 1.8 percentage points from the previous forecast (5.3%).
The optimistic view of the export situation is that the amount of trade in information technology (IT) products including semiconductors, automobiles, steel and machinery is expected to increase. The BOK determined that if exports improved, companies would increase facility investment, which would help economic growth.
“The increase in exports and facility investment by major domestic companies is a good sign,” said Han Eun Kim, head of the research bureau. “As construction investment (0.8%) increased, the quality of growth also improved.”
But the job market outlook was bleak. In November of last year, the BOK predicted that the number of employed will increase by 130,000 this year, but this time it has reduced the increase by 50,000 to an increase of 80,000. The rate of increase in private consumption was lowered from 3.1% to 2.0%. This is because household spending has declined due to the spread of Corona 19, and a cold wind is still blowing in the service industry in the aftermath of distance distancing.
Due to the recent rise in international oil prices, the rate of increase in consumer prices rose 0.3 percentage points from 1.0% to 1.3%. BOK Governor Lee Ju-yeol said, “There is a possibility that inflation pressure will increase due to the rise in raw material prices and consumption that has previously been suppressed.”
If group immunity is late, it is difficult to achieve 3%
However, experts point out that the BOK’s 3% economic growth forecast may be too optimistic. As the BOK predicted the economic growth rate, it accepted the quarantine authorities’ vaccination plans and forecasts, as it is unclear whether this plan will proceed smoothly.
The government plans to implement the first vaccination of 70% of the population by September with the aim of forming group immunity by November, but this period may be postponed further depending on the corona spread and the vaccine supply and demand situation. The Economist Intelligence Unit (EIU), an economic analysis agency in the UK, predicted that it will reach mass immunity by the middle of next year, given the situation in Korea’s vaccine supply.
“The biggest problem is that the vaccination is delayed compared to major countries, and the weak domestic economy rarely shows signs of survival,” said Kim Dae-jong, a professor at Sejong University. I will be able to do it.”
As the Korean economy recorded negative growth (-1.0%) last year after 22 years, it was pointed out that even if the economy grows this year, this is only an’optic illusion’ effect.
Kim So-young, a professor of economics at Seoul National University, said, “Even if we take into account the growth rate forecast (3.2%) presented by the government earlier, the recovery is still slow enough to reach 1% this year, which was the worst. It seems that there is no big adjustment from the standpoint,” he analyzed.
The BOK also acknowledges that a number of variables may lower the forecast for economic growth. In particular, the BOK predicted that the economic growth rate this year could only reach 2.4% this year and 1.9% next year in the event of adverse events such as re-proliferation of corona and intensifying conflict between the US and China.
Governor Lee Ju-yeol said, “The rebound in exports and the expansion of vaccines in major countries are positive aspects for our economy,” he said. “However, economic uncertainty is still high depending on how the corona spread such as mutant viruses will develop in the future.
Coarse reporter [email protected]
News directly edited by the Hankook Ilbo can also be viewed on Naver.
