460,000 Jobs Lost Due to COVID-19... "Second Biggest Shock After the Foreign Exchange Crisis"

Industrial Research Institute Report... "Annual Economic Growth Rate Falls by More Than 3%p... Employment Decreases by 460,000"

On the 9th, when 564 new COVID-19 cases were reported, bringing the daily count back to the 500s, citizens visiting the temporary screening clinic set up at Seoul Station lined up to get tested. Photo by Jinhyung Kang aymsdream@

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that COVID-19 lowered the annual economic growth rate by more than 3 percentage points and reduced employment by about 460,000 people. The shock COVID-19 inflicted on employment and private consumption was analyzed to be the second largest since the 1998 foreign exchange crisis.

The Korea Institute for Industrial Economics and Trade (KIET) stated this in its report titled "One Year After the COVID-19 Pandemic: A Mid-term Assessment of Economic Impact," released on the 9th.

In particular, the COVID-19 crisis caused private consumption to drop by 7.4 percentage points, which was the largest impact among the components of Gross Domestic Product (GDP). This was followed by imports, exports, and construction investment in terms of the shock's ripple effects.

On the other hand, facility investment showed a favorable trend, suggesting that companies might be considering this crisis as a short-term phenomenon. The institute noted, "Based on the shocks to private consumption and employment, the COVID-19 crisis is the second largest major economic recession following the 1998 foreign exchange crisis," adding, "The decline in real GDP growth rate is similar to that of the 2009 global financial crisis."

Although the GDP growth rate has been recovering since hitting its lowest point in the second quarter of last year, the recovery speed varies significantly across sectors. Manufacturing and exports rebounded quickly and have now recovered to pre-crisis trends, whereas employment, private consumption, and service production remain below pre-crisis levels.

By industry, face-to-face service sectors such as arts and sports, accommodation and food services, and transportation suffered significant damage due to COVID-19, while special COVID-19 sectors such as bio, semiconductors, and online distribution experienced a boom.

The institute emphasized, "The disparity in shocks between sectors is so large that it can be called polarization, which should be considered when implementing support policies," and added, "From the perspective of sharing pain and social solidarity, a temporary excess profit tax could be considered for sectors benefiting from the COVID-19 boom." Furthermore, it stressed, "Since this crisis originated from the threat of infectious diseases, efforts to suppress infectious diseases are crucial to minimizing economic shocks," and highlighted, "If the threat of infectious diseases is resolved through vaccine distribution, deferred consumption is likely to be realized, enabling the economy to recover rapidly, so flexible responses considering this are also important."

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