SEJONG, Sept. 15 (Yonhap) -- South Korea's economy is expected to retreat 1 percent this year over the coronavirus pandemic, but it will grow 3.3 percent next year as the world economy recovers, the Asian Development Bank (ADB) said Tuesday.
In its latest revision of regional growth projections, the ADB maintained its earlier forecast of 1 percent contraction for the Korean economy, while cutting the region's growth outlook to a contraction of 0.7 percent.
The coronavirus outbreak has plunged the Korean economy into a recession, as its gross domestic product shrank 3.3 percent in the second quarter after a 1.3 percent on-quarter retreat three months earlier.
In a report, the ADB said the Korean economy "is now projected to contract in 2020 but grow strongly in 2021 as the world economy recovers. A third supplementary budget, worth $29 million, was approved in July, raising the whole stimulus package to $230 million."
"With the export slump, the current account surplus will continue to narrow this year, as earlier projected. Uncertainty about COVID-19 remains the biggest risk to forecasts," it said.
Earlier this month, the state-run Korea Development Institute cut the nation's economic growth outlook to a contraction of 1.1 percent this year, a sharp downward revision of 0.2 percent expansion in its May forecast.
The downward revision is largely attributed to a recent resurgence of the new coronavirus that is widely expected to delay the pace of an economic recovery.
The ADB predicted Korea's inflation to remain muted in 2020, with both demand and commodity prices subdued, and then pick up in 2021.
The developing Asian region is expected to see its first economic contraction this year since the 1960s, the ADB said.
"Asia's path to recovery remains precarious half a year into the COVID-19 pandemic. Unfortunately, the regional economy will contract this year as the virus continues to spread and as ill effects linger from border restrictions, quarantines and stay-at-home orders," it said.
S. Korea mistakenly fires machine gun near border with N. Korea
S. Korea's new COVID-19 cases fall below 20,000 ahead of lifting of indoor mask mandate
(LEAD) N. Korea rejects alleged arms trading with Russia, warns of 'undesirable result'
(Yonhap Interview) NATO chief calls for stronger security ties with S. Korea to address China, other global challenges
Japanese teen romance film attracts 1 mln Korean viewers for 1st time in 21 yrs