Due to COVID-19 Spread... Woori Financial Research "This Year's GDP Growth Rate Revised Down from 2.2% to 1.8%"

On the 20th, as the KOSPI and KOSDAQ indices started higher, dealers were busy working in the dealing room of KB Kookmin Bank in Yeouido, Yeongdeungpo-gu, Seoul. The won-dollar exchange rate opened at 1,253.7 won, down 32.0 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Kwon Haeyoung] As the novel coronavirus disease (COVID-19) rapidly spreads worldwide, private economic research institutes are also lowering their economic growth rate forecasts.

According to Woori Financial Research Institute on the 21st, the forecast for real gross domestic product (GDP) growth rate in the first quarter of this year was lowered to 1.4% year-on-year, and the annual growth rate forecast was lowered to 1.8%. Previously, it was set at 2% for the first quarter and 2.2% annually.

Woori Financial Research Institute predicted, "As COVID-19 spreads globally, the shock to the domestic and foreign real economy will gradually become visible." It added, "The first quarter growth rate is expected to fall to -1.3% quarter-on-quarter and 1.4% year-on-year, mainly due to private consumption and the external sector. Although growth is expected to rebound quarter-on-quarter from the second quarter onward due to policy responses, the year-on-year growth rate is expected to remain at a low level."

In particular, if the spread of COVID-19 continues until the second quarter and the economic shock extends to the third quarter, the impact on the global economy and financial markets will intensify, and the domestic GDP growth rate is expected to slow down to 1.4%.

By sector, the shock to private consumption and exports is expected to be the greatest, and negative effects are also expected on facility investment and construction investment. The consumer price inflation rate was adjusted downward to 1.1% from 1.2% for the first quarter and to 0.8% from 1.1% annually, reflecting the impact of COVID-19. The number of employed persons is expected to increase by 458,000 in the first quarter and by 304,000 annually. Housing prices in the first quarter are forecast to show a slight firm trend with a 0.8% increase compared to the end of the previous quarter.

Woori Financial Research Institute stated, "As the situation prolongs, the damage to domestic demand, centered on private consumption and the service industry, will deepen," and added, "Due to the decline in global demand, suspension of operations, and reduced operating rates, production, exports, and investment in domestic manufacturing are expected to simultaneously weaken."

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