BOK: "Production Disruptions in 5 ASEAN Countries Increase Inflationary Pressure"

'Overseas Economic Focus' Announcement on the 7th

[Asia Economy Reporter Jang Sehee] An analysis has emerged suggesting that South Korea could suffer a greater impact than other countries such as China and Japan due to a decline in manufacturing output in some Asian countries caused by the spread of COVID-19.

On the 7th, the International Economic Department of the Research Bureau at the Bank of Korea stated in the 'Overseas Economic Focus' that if the manufacturing output of five ASEAN countries?Indonesia, Thailand, Vietnam, the Philippines, and Malaysia?decreased by about 7% in the third quarter, South Korea's annual gross domestic product (GDP) is expected to decline by 0.02 to 0.06%.

However, the Bank of Korea noted, "This is based on the limited assumption that there is no inventory of the relevant items and that substitute products cannot be found outside these five countries, so the actual effect is expected to be lower."

The Bank of Korea explained, "When calculating the ripple effect based on the value-added reduction rate, the impact of manufacturing production disruptions in these five countries on South Korea is analyzed to be greater than that on Japan, China, Germany, and the United States," adding, "This is because South Korea has a high manufacturing ratio and trade dependence."

South Korea's dependence on exports of intermediate goods to the five ASEAN countries last year was 17.8%, higher than China (15.8%), Japan (15.5%), the United States (4.5%), and the European Union (2.9%).

Meanwhile, the Bank of Korea emphasized, "Except for Malaysia, the vaccination rates in these countries are not high, so if COVID-19 resurges in the winter, the negative impact from production disruptions could expand," adding, "This could act as a factor that increases price pressures, intertwined with the global supply bottleneck phenomenon."

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