Can South Korea’s economy survive the coronavirus pandemic?
During the nearly two-year coronavirus pandemic, South Korea has seen around six hundred and eleven thousand cases and five thousand three hundred deaths, according to the latest data compiled by the Korea Disease Control and Prevention Agency (KDCA).
The loss of human life is indeed tragic, but the health crisis has also negatively affected the economy of the East Asian country, as third quarter data showed that strong exports were offset by low consumption. domestic due to the country’s strict coronavirus restrictions on business and social media. gatherings.
“As Korea’s recovery lost momentum in the last quarter as the virus weighed on growth, the economy is expected to accelerate again this quarter as high immunization levels help roll back containment measures “said Alex Holmes, Asia Economist at Capital Economics. Financial Time.
Dependence on exports
The Bank of Korea has forecast growth of around four percent for this year due to strong export figures.
“The external environment has also become more uncertain due to growing concerns over a deeper slowdown in mainland China, as well as disruptions in global supply chains,” Krystal Tan, economist at ANZ, told the newspaper.
“Yet we do not expect a major loss of momentum as the economy continues to open up and budget support will remain until 2022,” she continued.
Other analysts expect South Korea’s strong exports to be mainly driven by memory chips and electronics.
“We believe that an adequate supply of vaccines and South Korea’s ability to rapidly deploy booster injections will ensure a recovery in private consumption and corporate investment spending,” said Fei Xue, analyst for the ‘Asia at the Economist Intelligence Unit. The herald of Korea.
“A tight labor market and upward pressure on wage growth will also stimulate domestic demand, which will offset slower growth in goods exports.”
Reduce supply bottlenecks
Jacob Kirkegaard, a non-resident senior researcher at the Peterson Institute for International Economics, told the newspaper that the global supply bottleneck, a major obstacle for exporters, will likely be resolved in the semiconductor industry over the course of the next few months.
“I am optimistic that the global supply chain issues in the semiconductor industry will be resolved in the coming months, which means the fallout from chip shortages in the global automotive industries. and consumer electronics will abate and could very possibly turn into a glut of chips in 2023. and therefore a repetition of boom-bust cycles in the semiconductor industry, ”he said.
“This will naturally also affect South Korea’s large semiconductor industry, which, after recording very strong export earnings in recent quarters, is expected to slow in the near term as global supply picks up and could potentially suffer from a collapse in the medium term like the rest of the industry, ”he continued.
Meanwhile, by KBS World, South Korea’s economy is still expected to rank tenth in the world for a third consecutive year in 2022 in terms of nominal gross domestic product (GDP), The data of the International Monetary Fund revealed. The nominal GDP of Asia’s fourth-largest economy is expected to be $ 1.82 trillion this year and $ 1.91 trillion next year.
The International Monetary Fund (IMF) predicts that the South Korean economy will grow 4.3% this year and 3.3% next year.
Ethen Kim Lieser is a Washington state-based science and technology writer who has held positions at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow him or contact him on LinkedIn.