Seoul, Jul 23 (efe-epa).- South Korea’s gross domestic product contracted in the second quarter by 3.3 percent from the previous three months due to the COVID-19 pandemic, with the biggest drop for Asia’s fourth largest economy since 1998.
Compared to the same quarter of 2019, the South Korean economy contracted 2.9 percent, according to data published Thursday by the Bank of Korea (BoK).
This figure marks the slowest growth since the last quarter of 1998, when the country suffered the ravages of the financial crisis that began in 1997.
Due to the effects of the COVID-19 pandemic, the South Korean economy contracted 1.3 percent quarter on quarter in January-March, although it had shown an increase of 1.4 percent year on year.
The data presented Thursday is worse than the estimate that the BoK had given for the second quarter, when it spoke of a contraction of 2 percent compared to April-June of the previous year, putting its annual growth outlook at a contraction of 0.2 percent.
The decline was mainly due to the drop in exports, which represent the largest pillar of national GDP and fell by 13.6 percent – the worst figure since 1974 – in relation to the second quarter of 2019.
Consumption also showed its weakness again, falling by 4.1 percent compared to the second quarter of the previous year, while it was public spending that contributed to somewhat alleviating the situation with an increase of 6 percent.
The South Korean government has already approved three extraordinary budgets worth a combined 59 trillion won (about $49.2 billion).
Even so, investment in corporate capital or in the construction sector showed little progress of 1.5 percent and 0.1 percent respectively.
For BoK’s chief statistician Park Yang-su, the decline in GDP was “largely caused by a sharp drop in exports with the new coronavirus continuing to spread, unlike our expectation that it will likely slow down,” he said, according to Yonhap agency.
“Exports fell sharply, partly due to economic lockdowns in major import countries,” he said. EFE-EPA