S&P Forecasts South Korea's Growth to Contract This Year... Downgraded to -0.6%

Hong Kong, Japan, Singapore, and Others Expected to Experience Negative Growth Simultaneously

[Asia Economy Reporter Kim Eun-byeol] Due to the spread of the novel coronavirus infection (COVID-19), there is a forecast that South Korea's economic growth rate for this year will record a negative figure.

On the 23rd, the international credit rating agency Standard & Poor's (S&P) Global Ratings projected that South Korea's gross domestic product (GDP) growth rate for this year will record a contraction of -0.6%. At the end of last year, S&P Global had estimated South Korea's growth rate for this year at 2.1%, but after the spread of COVID-19, it was revised downward to 1.9%, 1.6%, 1.1%, and now it forecasts a contraction.

However, S&P expects South Korea's growth rate next year to be 5.0%, significantly higher than the previous forecast (2.3%), anticipating an economic rebound following this year's recession.

S&P stated that due to the spread of COVID-19, the economic losses borne by governments, banks, companies, and households in the Asia-Pacific region are currently estimated at approximately $620 billion (about 791 trillion KRW).

Accordingly, the average growth rate for the Asia-Pacific region is projected to be 2.7%. By country, China's GDP growth rate this year is estimated to slow to 2.9%. Hong Kong (-1.7%), Singapore (-0.8%), and Japan (-1.2%) are also expected to record negative growth rates.

S&P said, "There is high uncertainty regarding the speed of COVID-19's spread and the timing of its peak," adding, "Some countries expect the virus spread to peak in June or August." It continued, "Due to the spread of COVID-19, the global economy has entered a recession," and "defaults among non-financial companies could increase significantly."

Meanwhile, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at a foreign press briefing on the 20th, "Considering the ripple effects on domestic and foreign consumption, investment, and exports, the possibility of negative growth in the first quarter of this year cannot be ruled out."

Lee Hwan-seok, Deputy Governor of the Bank of Korea (Director of the Research Department), also explained at an economic outlook briefing at the end of last month, "Since the COVID-19 situation is ongoing, it is difficult to make a definitive judgment, but short-term negative impacts are inevitable," adding, "With the real economy significantly slowing down in February and March, the first quarter growth rate may fall short of last year's first quarter (-0.4%), which recorded negative growth."

This content was produced with the assistance of AI translation services.