South Korea's Q2 Growth Rate Ranks 2nd Among 38 Countries... Q3 Outlook Uncertain

Cannot guarantee the third quarter amid COVID-19 resurgence after August

[Asia Economy Reporter Kim Eunbyeol] Due to the impact of the novel coronavirus infection (COVID-19), South Korea's economic growth rate fell by more than 3% in the second quarter, but compared to 40 major countries, it showed the second-best performance after China.

According to the Bank of Korea and others on the 4th, South Korea recorded a real gross domestic product (GDP) growth rate (quarter-on-quarter) of -3.2% in the second quarter of this year, ranking second highest after China (11.5%) among 38 countries including 36 OECD member countries except Latvia, China, and Russia.

Russia (-3.2%) tied with South Korea for second place, followed by Finland (-4.4%), Norway (-5.1%), Estonia (-5.6%), Ireland (-6.1%), Latvia (-6.5%), Indonesia (-6.9%), and Denmark (-6.9%).

Additionally, Japan (-7.9%) ranked 13th, the United States (-9.1%) 21st, and Germany (-9.7%) 24th.

The country with the worst economic performance in the second quarter was the United Kingdom (-20.4%), followed by Spain (-17.8%) and Mexico (-17.1%).

Compared to the first quarter rankings, South Korea rose ten places from 12th (-1.2%), and China (-10%), which recorded the lowest growth rate in the first quarter, rebounded the most significantly within one quarter.

Chile (3%) and Sweden (0.2%), which maintained positive growth and ranked first and second in the first quarter, fell to -13.2% and -8.3% respectively in the second quarter, joining the negative growth group.

Compared to major countries worldwide, South Korea experienced less economic shock in the second quarter due to the absence of full lockdown measures. South Korea's GDP growth rate is also expected to perform relatively well in the third quarter. According to Bloomberg's aggregation of forecasts from 24 domestic and international investment banks (IB) and economic research institutes, South Korea's third-quarter growth rate is expected to be an average of -1.5% year-on-year. Among 16 countries surveyed under the same criteria within the Group of 20 (G20), this is the second-best level after China (5.2% growth). The growth rate forecasts for the United States, Japan, and Canada were based on the previous quarter.

However, since mid-August, with the second wave of COVID-19 and strengthened social distancing measures, the situation after the third quarter cannot be viewed optimistically. Some predict that if consumption contracts more significantly than now due to distancing measures for the remainder of the year, the growth rate could fall to the -3% range.

Earlier, the Bank of Korea presented its real GDP growth rate forecast for this year at -1.3% (base case) and -2.2% (pessimistic case) at the end of August. The base scenario assumes that 'Level 2 social distancing' continues until the end of September, while the pessimistic scenario assumes it continues until the end of the year.

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