Fitch Lowers South Korea's Economic Growth Forecast by 0.2%p...Less Impact from COVID-19

Sejongno Intersection, Jongno-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Donghoon Jeong] The international credit rating agency Fitch has downgraded South Korea's growth forecast for this year from -0.9% to -1.1%. This change reflects the resurgence of COVID-19 infections and other factors.

In its World Economic Outlook report released on the 8th, Fitch stated, "South Korea's economic recession due to COVID-19 is less severe than in most other countries," adding, "Despite the recent increase in new confirmed cases, quarantine measures have been successful. As a result, there was no need for strict restrictions on economic activities."

However, Fitch also forecasted, "While the economic recovery will continue in the second half of the year, private consumption is expected to slow significantly until the end of the third quarter due to strengthened social distancing measures."

In the second quarter, the gross domestic product (GDP) contracted by 3.2% quarter-on-quarter, worsening from the first quarter's -1.3%. Fitch attributed this to a decrease in external demand caused by economic downturns in South Korea's trading partners.

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