Lee Chang-yong, IMF Director: "Korea's Economic Impact from COVID-19 Will Be Smaller Than That of Advanced Countries"

[Asia Economy Reporter Jeong Hyunjin] Lee Chang-yong, Director of the Asia-Pacific Department at the International Monetary Fund (IMF), stated regarding the economic adverse effects of COVID-19 in South Korea that "the negative impact on growth is expected to be smaller than in advanced countries." Earlier, the IMF downgraded South Korea's economic growth forecast for this year to -1.2%, but assessed that it would perform relatively well compared to other regions. He predicted that the Asia-Pacific region's economic growth rate would be the lowest since the 1960s.

Director Lee made these remarks during opening comments at a virtual briefing on the Asia-Pacific region's economic outlook for this year on the 15th (local time) and in a blog post published the same day on the IMF website titled "The COVID-19 Pandemic and the Asia-Pacific Region: The Lowest Growth Since the 1960s."

Regarding the IMF's growth forecast for South Korea this year, Director Lee explained that it "reflects South Korea's effective strategy to flatten the infection curve," which helped avoid significant production disruptions in manufacturing and services.

On the Asia-Pacific economy, he said, "This is an unprecedented crisis, and the situation is worse than the global financial crisis. Asia is no exception," adding, "There is tremendous uncertainty in this year's economic growth outlook, and next year's outlook is even more uncertain." In particular, Asia's economic growth rate is expected to be 0% this year, worse than during the global financial crisis (4.7%) or the Asian financial crisis (1.3%), marking the worst economic performance in over 60 years.

He noted that the global economic slowdown trends caused by social distancing and countries' quarantine policies, as well as China's economic situation, will impact the Asian economy.

However, he said, "There is hope in 2021," and if virus containment policies succeed, growth will rebound. He emphasized, "Now is not the time to do business as usual. Asian countries need to use all policy tools."

Emphasizing the importance of policy, Director Lee advised that the top priority should be supporting and protecting the health sector to suppress the virus and implementing measures to slow infections. He also added that if fiscal capacity is insufficient, priorities should be adjusted from other expenditures.

Director Lee stressed the need for support targeting households and businesses severely affected by COVID-19 containment measures, emphasizing the direct protection of not only financial institutions but also people, jobs, and industries. He further mentioned that for emerging markets with limited fiscal capacity, central banks need to exercise flexibility to help small and medium-sized enterprises, and countries should seek and utilize bilateral or multilateral currency swaps and institutional financial support.

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