‘Slowdown in US, China, Japan can lower Korea’s economic growth by 2%’

A slowdown in major economies following the global coronavirus pandemic could cut South Korea’ economic growth rate by as much as 2 percentage points, according to a local business research center Wednesday.

The Korea Economic Research Institute analyzed the impact of the growth rate of three countries -- the US, China and Japan -- on the growth rate of Korea based on data from the Organization for Economic Cooperation and Development.

It found that if the growth rate of the three countries drops by 1 percentage point, Korea’s growth rate will be cut by 0.5 percentage points for Japan and 0.4 percentage points for the US and China, respectively.

Last week, Fitch Ratings cut global growth outlook by 4.4 percentage point from 2.5 percent to minus 1.9 percent due to the recent global spread of coronavirus.

It also lowered the growth outlook of the US from 2 percent to negative 3.3 percent, China from 5.9 percent to 1.6 percent and Japan from 0.4 percent to minus 2.7 percent.

According to an analysis of the impact on Korea’s growth rate based on Fitch’s downward revision of the growth rate, the KERI predicted that the growth rate would fall in the order of the US by 2 percentage point, China by 1.9 percentage point and Japan by 1.5 percentage point.

“Considering the highly dependent Korean economy and the deepening level of globalization, independent economic stimulus and quarantine alone will not be enough for our economy to recover,” the KERI said.

“Through international cooperation, we should strengthen economic stimulus policies around the world and prevent the contraction of international trade.” 

By Shin Ji-hye (shinjh@heraldcorp.com)