The Bank of Korea: "Rapid Spread of COVID-19 in Major Countries... Weakening Global Economic Growth"

Bank of Korea 'Overseas Economic Focus'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] Despite vaccine distribution, the spread of COVID-19 is accelerating in major countries, weakening the global economic growth trend.

According to the 'Overseas Economic Focus' released by the Bank of Korea on the 31st, the U.S. economy shows a somewhat sluggish recovery as the resurgence of COVID-19 intensifies. U.S. retail sales decreased for three consecutive months: -0.1% in October, -1.4% in November, and -0.7% in December.

The Bank of Korea forecasted, "Although the impact of COVID-19 is expected to persist for some time, the recovery trend will continue supported by vaccine distribution and large-scale fiscal stimulus measures."

The Eurozone economy is experiencing a weakening improvement trend, especially in retail sales and service production, due to strengthened quarantine measures amid the resurgence of COVID-19.

Retail sales in November (month-on-month -6.1%) sharply declined, and the services PMI fell significantly below the baseline. Slow progress in COVID-19 vaccinations and the expansion and extension of movement restrictions in some countries such as Germany are expected to delay economic recovery.

The Japanese economy continues a weak economic trend with declines in both production and consumption. Industrial production in November recorded -0.5%, turning negative from 4.0% in October, and exports decreased for two consecutive months. While Japan's exports increased by 2.6% in October last year, November and December recorded -0.3% and -0.1%, respectively. The Bank of Korea stated, "As the resurgence of COVID-19 intensifies, a state of emergency has been reissued in major areas including the Tokyo metropolitan area, delaying consumption recovery."

The Chinese economy continues a solid recovery in both domestic demand and exports. The business sentiment index (PMI) for manufacturing (52.1→51.9), services (55.7→54.8), and construction (60.5→60.7) all remain above the baseline (50) since March. However, since January, the number of COVID-19 infections has increased mainly in some areas such as Hebei, raising concerns about a winter resurgence.

The five ASEAN (Association of Southeast Asian Nations) countries show a slow improvement trend as domestic demand remains sluggish due to the resurgence of COVID-19 despite export recovery. India is gradually improving, mainly in consumption, as economic activities normalize with eased lockdown measures. In Brazil, the government’s large-scale emergency disaster relief payments targeting vulnerable groups have maintained an improvement trend centered on consumption.

Meanwhile, international oil prices (Dubai crude basis) rose to the mid-$50 range in January. Factors influencing this include Saudi Arabia's voluntary production cuts, expectations of additional economic stimulus from the Joe Biden U.S. administration, and a decrease in crude oil inventories. The Bank of Korea stated, "International oil prices are expected to continue fluctuating for some time depending on the development of COVID-19, vaccine distribution status, and production levels of major oil-producing countries."

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