The Bank of Korea: "US Growth Temporarily Slows Due to Delta Variant... Euro Inflation Expected to Stabilize"

Bank of Korea 'Overseas Economic Focus'

[Asia Economy Reporter Eunbyeol Kim] Although the growth trend has slowed due to the spread of the COVID-19 Delta variant in the United States, its impact on the economy is less than in the past, and it is analyzed that a solid economic recovery trend will be restored once the spread of the infectious disease subsides.

On the 12th, the Bank of Korea stated in its 'Overseas Economic Focus' report, "Consumption and employment indicators have been weaker than expected due to the recent spread of the Delta variant in the U.S.," but added, "The impact on the economy is assessed to be less than in the past."

The number of confirmed COVID-19 cases (7-day moving average), which began to surge in July, reached 160,000 at the end of last month, approaching two-thirds of the peak (251,000) during the previous major outbreak.

Accordingly, the recovery in the face-to-face service sector has stalled since July, and consumer confidence has declined. In August, the increase in the number of employed persons (235,000) significantly fell short of market expectations (733,000). According to OpenTable, the U.S. restaurant reservation rate recovered to -4.8% in July this year but dropped again to -9.9% in August.

The Bank of Korea, citing the Peterson Institute for International Economics (PIIE) in its report, explained, "Compared to the initial pandemic when employment decreased by more than 10,000, the recent impact of the Delta variant is about 2-3% of the damage caused by the first major outbreak." This means that even if COVID-19 resurges compared to the past, its impact on the economy has lessened.

Furthermore, "Despite the spread of the infectious disease, economic agents' mobility is being maintained, and considering the low possibility of additional movement restrictions, it is expected that a solid economic recovery trend will be restored if the spread of the infectious disease eases in the future."

Meanwhile, the Bank of Korea evaluated that although the consumer price inflation rate in the Euro area rose from 2.2% in July to 3.0% last month, the likelihood of sustained high inflation is low. This inflation increase is mainly attributed to supply-side factors such as rising international oil prices and ongoing supply disruptions, which appeared as a result of the normalization of economic activities.

The Bank of Korea forecasted, "As supply disruptions gradually diminish, the inflation rate will stabilize in the mid-1% range after next year."

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