Last Year's GDP Growth Rate -1.0%... Contraction for the First Time in 22 Years (Comprehensive)

Announcement of Bank of Korea's '2020 Q4 and Annual Real GDP (Preliminary)' on the 26th

On the 22nd, as social distancing measures to prevent the spread of the novel coronavirus infection (COVID-19) continue, a store is closing down in a food street in Mapo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Jang Sehee] South Korea's economic growth rate last year recorded -1.0%, marking the first negative growth in 22 years since the 1998 foreign exchange crisis (-5.1%). This was due to the ongoing impact of the novel coronavirus infection (COVID-19) throughout the year.

According to the '2020 Q4 and Annual National Income (Preliminary)' report released by the Bank of Korea on the 26th, last year's real Gross Domestic Product (GDP) recorded -1.0%. This is the lowest since the 1998 foreign exchange crisis (-5.1%). The fourth quarter of last year recorded 1.1%. After negative growth in the first quarter (-1.3%) and second quarter (-3.2%), the economy showed signs of recovery from the third quarter (2.1%).

By expenditure items, government consumption and facility investment turned to increase, but private consumption and exports decreased. Private consumption decreased by 1.7% as both services (food and accommodation, transportation, etc.) and goods (food and beverages, etc.) declined. Government consumption also decreased by 0.4%, mainly due to spending on goods and health insurance benefits.

Construction investment increased by 6.5% as both building and civil engineering construction rose. Facility investment decreased by 2.1% as machinery increased but transportation equipment declined. Exports increased by 5.2%, centered on semiconductors and chemical products, while imports rose by 2.1%, mainly machinery and equipment.

By economic activity, construction increased, but manufacturing and services saw a reduction in growth. Construction grew by 2.6% each, with increases in both building and civil engineering construction. Manufacturing grew by 2.8%, driven by chemical products, computers, electronics, and optical devices. Services increased by 0.4%, despite declines in accommodation and food services and transportation, due to growth in information and communication, medical and health, and social welfare services.

Agriculture, forestry, and fisheries increased by 4.9%, centered on cultivation and fisheries. Additionally, electricity, gas, and water supply businesses grew by 5.9%, mainly due to the electricity industry.

Meanwhile, real Gross Domestic Income (GDI) decreased by 0.3% on an annual basis compared to the previous year. Although it recorded negative growth for two consecutive years, it outperformed real GDP growth due to improved terms of trade from falling oil prices.

In this regard, Professor Kim Sangbong of Hansung University’s Department of Economics said, "It is highly likely that private consumption fell further in December," and predicted, "Future economic indicators will worsen further."

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