"South Korea's Unemployment Rate May Soar to 5%... Concerns Over 2Q Economic Recession"

Oxford Economics Report

[Asia Economy Reporter Eunbyeol Kim] A warning has been issued that South Korea could enter a recession starting from the second quarter. Despite large-scale economic stimulus measures, the unemployment rate is expected to soar to 5%.

Oxford Economics, a UK-based economic analysis firm, stated in a report on the 30th (local time), "The swift and strong policy measures by the South Korean government are commendable, and the market has shown relatively calm behavior," but added, "We believe the worst situation has not yet arrived."

The report forecasted, "As the global economic outlook rapidly deteriorates, South Korea is highly likely to fall into a recession from the second quarter," and "Despite the Bank of Korea's remarkable monetary policy and government fiscal policy, the unemployment rate could rise to 5% in the next quarter." In particular, the report analyzed that the unemployment rate in South Korea's service industry sector is at a high level.

Along with this, the growth rate forecast for South Korea's economy this year based on Gross Domestic Product (GDP) was lowered from the previous 1.4% to 0.2%.

The report also predicted that South Korean manufacturers with overseas production facilities will face short-term disruptions. Examples cited include Samsung Electronics' closure of some production facilities in India, Slovakia, and Brazil; Hyundai Motor and Kia Motors' suspension of operations at some factories in Europe and the United States; and LG Chem's closure of its electric vehicle battery plant in the United States.

Meanwhile, Oxford Economics also forecasted that the value of the Korean won could weaken in the short term. The won-dollar exchange rate is predicted to be 1,294 won in the second quarter, 1,268 won in the third quarter, and 1,206 won in the fourth quarter of this year.

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