The Bank of Korea: "High Possibility of Easing Quarantine Measures... Global Economic Recovery to Continue Next Year"

On the 5th, the Bank of Korea Publishes Overseas Economic Focus

[Asia Economy Reporter Jang Sehee] The Bank of Korea forecasted that although uncertainty has increased due to the emergence of Omicron, a new variant of COVID-19, the global economy will continue its recovery trend next year.

On the 5th, the International Economy Department of the Bank of Korea's Research Bureau stated in the weekly publication 'Overseas Economic Focus' that "we evaluated factors influencing the future global economy, including the infectious disease situation, global supply bottlenecks, the pace of China's economic slowdown, and the speed of the U.S. Federal Reserve's (Fed) interest rate hikes," and made this assessment.

The Bank of Korea noted that while it has become difficult to predict the future course of the infectious disease due to the emergence of the Omicron variant, "thanks to the development of oral COVID-19 treatments, booster shots in advanced countries, and rising vaccination rates in emerging countries, the intensity of quarantine measures is likely to ease."

It also emphasized, "Although the expected effect of movement restrictions is limited, the economic cost is significant, so the sustainability of strong quarantine measures from an economic perspective is considered to have decreased."

In particular, it expected that the rise in raw material prices and logistics disruptions will be resolved next year. It observed that oil-producing countries are gradually increasing oil production, and global demand is shifting from goods to services, which will improve transportation conditions.

China's economy is showing a moderate slowdown due to fiscal capacity and favorable external demand, and the pace of monetary policy normalization, including the Fed's interest rate hikes, is expected not to be rapid.

The Bank of Korea emphasized, "The global economy is highly likely to gradually recover from the COVID-19 shock, normalize economic activities, and continue its recovery trend."

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