S. Korea's GDP drops 3.2% in Q2, worst since 2008

Asia’s fourth-largest economy shrank 3.2 percent on-quarter in the April-June period, central bank data showed Tuesday, slightly slower than the central bank’s previous estimate, but nonetheless showing its sharpest contraction since the 2008 global financial crisis.

While the figure was an improvement from a 3.3 percent estimated contraction announced in July, it marked a sharp on-quarter decline from minus 1.3 percent for the January-March period. The economy also contracted 2.7 percent on-year.

The data prompted concerns from onlookers as it marked the economy’s lowest quarterly growth figure since the October-December period of 2008 when the corresponding figure stood at minus 3.3

The contraction of the economy came with a continued slump in the nation’s exports, which overall fell 16.1 percent on-quarter in the April-June period amid the coronavirus pandemic. The reading marked the worst slump since the fourth-quarter of 1963 when the corresponding figure stood at minus 24 percent.

Overall growth in the manufacturing sector fell 8.9 percent in the same period, which marked the lowest since the second-quarter of 1963 when the corresponding reading stood at minus 10.4 percent.

For the nation’s economy to meet the BOK’s 2020 growth forecast of minus 1.3 percent under the current circumstances, Park Seong-bin, director of the central bank’s National Accounts Division said that it must see a quarterly growth of 1.3 percent in both the third- and fourth quarters. But Park said it is difficult to know what the effects of the government’s implementation of the Level 2 and Level 2.5 social distancing rules will be on the economy, due to the measure’s timeframe.

By Jung Min-kyung (mkjung@heraldcorp.com)