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S. Korea's economy shows 'deepening contraction' over coronavirus pandemic: KDI

All News 12:00 April 16, 2020

SEOUL, April 16 (Yonhap) -- The South Korean economy shows signs of a "deepening contraction" as the coronavirus pandemic and lockdown measures have halted global businesses and ravaged consumer demand, a state-run think tank said Thursday.

"The Korean economy is showing a deepening contraction and mounting uncertainties as COVID-19 spreads," the Korea Development Institute (KDI) said in its English-language Monthly Economic Trends publication.

South Korea's overall industrial output contracted the most in nine years in February, as the economic fallout from the spread of the new coronavirus began to affect manufacturing activity and domestic spending.

The 3.5 percent on-month drop in February marked the sharpest decline since February 2011, when the output dipped 3.7 percent.

"Manufacturing production and the capacity utilization rate decreased on disruptions in the supply of automobile parts from China," it said. "But, the decline in exports eased in March led by automobiles and semiconductors, suggesting that COVID-19 has had a limited negative impact in manufacturing thus far."

This file photo shows the Korea Development Institute's headquarters in Sejong, an administrative hub about 130 kilometers southeast of Seoul. (Yonhap)

South Korea's exports fell 0.2 percent in March from a year earlier in the face of the growing economic fallout from the coronavirus pandemic.

In the first 10 days of April, however, the nation's exports tumbled 18.6 percent on-year.

"Given the soaring number of confirmed COVID-19 cases in Europe and the US since March, the impact from the decreasing overseas demand will grow," the KDI said.

Earlier this week, the International Monetary Fund (IMF) predicted that South Korea's economy would shrink 1.2 percent this year as the global economy is expected to hit its worst year since the Great Depression of the 1930s over the pandemic.

The world economy is expected to contract 3 percent this year, the IMF said.

In another grim milestone, the global death toll from COVID-19 has surpassed 130,000, and infections topped 2 million, according to data compiled by Johns Hopkins University.


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